Mayor John Tory is preparing Torontonians for new taxes or fees to pay for transit and social housing as well as a public debate about selling city assets.

Tory made the case Monday after city manager Peter Wallace released a report urging council to address a bleak long-term fiscal outlook that includes a growing gap between spending and revenues.

Wallace will soon release a report on possible “revenue tools” — new taxes or levies on parking spaces, alcohol, gasoline, road tolls or more — to help Toronto pay for transit expansion and Toronto Community Housing repairs.

“Once that report is received,” Tory told reporters in his office, “we will move ensure that the city has a sustainable source of revenue to finance the building and operation of transit in Toronto and the supply and repair of housing.”

Tory refused to pick preferred new taxes or fees, and vowed he won’t renege on his 2014 campaign pledge to limit property tax hikes to at, or around, the rate of inflation.

Despite the fact that Toronto homeowners pay the lowest property taxes in the GTA, Tory said taxpayers are “stretched to the limit and they can’t sustain more.”

The mayor agreed with Wallace that Toronto council also needs to take a hard look at “monetizing” some city assets to free up money to pay for capital expenses including transit expansion.

The Star reported in January that behind-the-scenes work has happened at Toronto Hydro to set the stage for a possible partial sale of the publicly owned utility.

Tory said tax implications may render that idea not “viable” but council has to “at least discuss the better use of the money that is tied up in some of those assets, to build transit and housing.”

Tory also called for greater spending accountability from Toronto’s arms’-length agencies, including the Toronto Community Housing Corporation, the TTC and Toronto police, which together comprise a huge and growing chunk of the city budget.

He said he was flabbergasted to recently learn the TCHC board approved long-term debt — $250 million in May 2007 and $200 million in February 2010 — for Regent Park redevelopment and other capital costs without seeking city council approval and with no plan to repay the debentures that cost $23 million a year in interest.

TCHC said the first debenture has a fixed interest rate of 4.877 per cent, with principle to be fully paid in May 2037, and the second at 5.395 per cent due in February 2040.

“I can’t speak to decisions made in 2007 and 2010, but today this type of decision would not be made (today) without full knowledge of the city . . . Robust communications channels have been put in place within the past two years,” TCHC spokeswoman Lisa Murray said in an email.

Tory also took aim at his predecessor Rob Ford, without naming him, over an unfunded capital account that has swelled to almost $1 billion.

The city manager’s report says council has in recent years papered over a dangerously widening gap between spending and revenues.

Spending has actually decreased in recent years, when you account for inflation and population growth, but council has approved city-building initiatives including transit expansion and poverty-reduction efforts with no clear plan to pay for them, Wallace said.

He wants Tory’s executive committee, which meets next week, to have him report back in the fall with detailed options, including revenue tools and contracting out of more city services, to put the city on a potentially painful track to long-term fiscal stability.

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Councillor Gord Perks criticized Tory’s property tax vow, saying Wallace’s report shows spending has dropped in real terms in recent years. Meanwhile, transit, housing and inflationary costs continue to grow.

“If (Tory) is not prepared to say what services he cuts in order to keep property taxes low, then he’s doing exactly what he’s blamed previous administrations for, which is not being honest with the citizens of Toronto,” Perks said.

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