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Capital-budget picture rosy, Miller declares

Federal, provincial funding makes $1.3-billion outlay possible, mayor says

Saturday, December 10, 2005 Page A22

Largely thanks to a cash injection from others, the City of Toronto is about to approve a $1.3-billion capital budget that allows for speedier repairs to roads, recreation centres and police stations in 2006.

Even so, the city plans to borrow $350-million this coming year, adding to a debt load expected to rise steadily through 2010.

In effect, an increasing share of property taxes will go to pay for debt charges. Mayor David Miller calls the trend “challenging”, but says it will not impair the city’s credit rating.

By 2010, debt charges will account for 15.9 per cent of properties, up from 9.5 per cent this year.

Meanwhile, council approved a water-rate hike of 9 per cent for 2006, raising the average household bill to $406 a year.

Most of the extra revenue will go to replace the city’s aging pipes.

Mr. Miller described the overall picture for the capital budget yesterday as “very positive,” a significant change from past years.

That’s because the federal and provincial governments have invested significantly in transit funding for a change.

The cumulative impact of announcements since May, 2004, including this year’s pledge of gas-tax funds from Ottawa and the province, means that the senior governments are putting up about two-thirds of the $550-million earmarked for replacement buses and maintenance for the Toronto Transit Commission next year.

That ratio almost puts the city back in the same position as it was in the mid-1990s when the province provided a predictable, annual flow of capital dollars for the TTC. Until 2004, the federal government had not invested in the TTC.

However, there is still almost no new money for expansion projects, such as new subways.

With the cash infusion for transit, the city can start to pare away at a backlog of projects — from potholes and road repairs to parks and recreation — deferred in past years for lack of funds.

City officials now estimate that the backlog of road repairs built up over the past decade could be wiped out over the next 10 years.

Meanwhile, some councillors became almost giddy when they learned that the city was $1.3-million below its maximum borrowing limit of $350-million for 2006.

As a result, council voted yesterday to borrow an extra $700,000 to pay for improvements for parks and recreation services next year.

Councillor and former budget chief David Shiner (Willowdale) said the move was equivalent to “maxing out a credit card.” But Councillor Brian Ashton (Scarborough Southwest) argued “a lot of our facilities are in very bad shape and they must be fixed.”

Yesterday, the budget debate bogged down over a move to spend an extra $30-million for capital improvements on St. Clair Avenue West, thus boosting the cost of a $65-million transit right-of-way project.

Councillor Joe Mihevc (St. Paul’s) said the proposal to spend extra money to bury utility wires and make streetscape improvements — timed for the expected construction upheaval — was “similar to renovating a house.”

But others railed against the proposal as a sneaky move to go beyond the agreed price-tag of $65-million for the controversial project, which is now stalled in court by business owners and citizens opposed to it.

Council is expected to approve the capital budget on Monday.

More income - and debt

The city’s proposed capital budget, expected to pass Monday, includes a massive boost in outside funding, largely through a share of gas taxes.

Contribution to Toronto’s capital budget ($millions)

           Federal     Provincial
2004        $70M        $75.8M
2005        $53.9M      $82.6M
2006       $216.4M     $178.4M

The city also plans to borrow heavily to pay for major building and maintenance programs.

Debt service cost, projected ($millions)

2006    $15M
2007    $78M
2008   $112M
2009   $125M
2010   $128M

Even so, many aspects of the city will be well behind in the spending estimated to meet “state of good repair” goals.

Selected examples                2006 budget  Estimated shortfall 
                                 ($millions)  at end of 2006 ($millions)
Emergency Medical Services           3.58           14.76
Parks, Forestry & Recreation        34.31           49.55
Fire Services                        2.72            1.95
Transportation Services            142.39          294.24
Facilities and Real Estate           2.22          103.00
Fleet Services                      57.52           45.90
Information Technology               8.063          16.36
Conservation Authority               5.61           57.39
Parking Enforcement                  0.43            0
Police Service                      30.85            0
Public Library                      11.98           14.70
Zoo                                  2.66     
TTC                                490.29            0
Water                              217.64          741.11


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