Brave New Budget: The City must raise property taxes to make critical progress on climate action

As Toronto residents who care deeply about taking action on the climate crisis, what are we prepared to do?

How can we stop Toronto’s emissions from continuing to rise, and keep our loved ones and neighbours safe during extreme weather events? How can we invest in the kind of housing, transit, and community infrastructure that would make Toronto the world class, climate-friendly, and compassionate city we know that Toronto can be? With Toronto’s 2024 Budget is before City Council, a critical step is to support the brave and necessary proposal to increase property taxes.

At TEA, we have long advocated for the City’s climate strategy to be funded at a pace and scale that addresses this unprecedented and existential challenge. For Toronto’s 2024 Budget, raising property taxes is the most important financial tool the City has to make progress on climate action and other critical priorities that must be funded through City’s core revenue base. The TransformTO Net Zero Strategy cannot be treated like a “special project” that the City resources with piecemeal funding. We will never achieve the transformative climate action Toronto has committed to, unless we fund the Strategy on the same basis, and as part of, other core priorities.

For years, Toronto’s property taxes have been kept artificially low (some years below inflation) and have been among the lowest rates in Ontario. This has come at the cost of harmful under-resourcing of social and housing supports, crumbling infrastructure (recently, a derailed SRT), and rising emissions, to name a few impacts.  It would have been more prudent to increase property taxes at a reasonable rate over time, but after years of our former Mayor and Council kicking this can down the road, and the provincial and federal governments downloading responsibilities and chronically under-funding Toronto, we must now confront our City's financial crisis.

In the draft 2024 Budget, City staff proposed a general residential property tax rate of 10.5 percent (including the City Building Fund). This rate was subsequently lowered in the Mayor’s Budget to 9.5 percent. The rate for multi-residential buildings was also lowered to 3.5%, which will guard against tenants living in apartments experiencing an above-guideline rent increase (AGI) due to an “extraordinary increase”. This general rate will cost the average homeowner an additional ~$28 per month, and the City is providing an income-based relief program. In the context of generational housing, affordability, and climate crises, we understand why the City must ask those with means to contribute a little bit more in order to keep our city running and moving forward. 

In terms of climate action, the draft Budget includes funding for important programs to make our buildings more climate-friendly and safe, freezing transit fares and improving transit service levels (including starting work on the Scarborough Busway), and ensuring there are enough City staff to do the work.

And just to be clear, what is currently funded in the Budget (with the property tax increase included), is still not nearly enough. The City is falling behind on its climate targets, and is currently not on track for a “Net Zero by 2040” scenario. We need much bigger, bolder multi-year investments: to retrofit and build thousands of affordable housing units to the highest green standard, to have an affordable, reliable and accessible public transit system that serves every corner of our city, and to resource community-centered initiatives to keep residents in every neighbourhood safe during extreme weather events.

Given the critical importance and integrated nature of these actions and investments, we must guard against pitting climate action against other important City priorities for funding (such as the ranking residents were asked to do during the City’s Budget consultations). In the context of the City’s long running financial crisis, and with cost of living being top of mind for many residents, our city is being confronted with untenable choices. If we had to personally prepare for an extreme flood or heat wave emergency, most of us would choose to invest in measures to protect our health, safety, possessions, and homes - even if climate action is not a top, day-to-day priority.

Instead of harmful trade-offs, we must keep the pressure on all levels of government to move quickly towards critical interim and long-term financial solutions for Toronto. We applaud the City’s ability to secure an agreement from the provincial government, but this is not a transformative ‘new deal’. This is the beginning of what the Province must do to compensate Toronto for removing important revenue sources, and underfunding our city.

Furthermore, the federal government has access to far more powerful funding tools than the City, and must immediately take up its responsibilities for funding critical priorities such as supports for refugees and asylum seekers, and ‘walk the talk’ when it comes to deep investment in climate action. Use our tool to send a message to your MP about this. Ultimately, we must push the federal and provincial governments to enact more profound and durable solutions for our city, such as giving Toronto a share of income tax, or bestowing the City with new legislative powers to raise additional revenue.

On February 14th, when our City Council votes on the 2024 Budget, this could be a turning point. Our locally elected officials could collectively make the responsible and brave decision to raise property taxes to the level needed to respond to Toronto’s dire financial situation. As Toronto residents, we must urge our Council to do what’s necessary, and use this as a strategic lever to compel other levels of government to do right by our city.

We must reject the scarcity narrative, which has hampered Toronto’s progress for years. There are enough resources for Toronto to fund all its commitments, if all levels of government have the will to fix the problem. We can have a city that is able to house, care for, and create opportunities for all its residents, with the social supports and community infrastructure to welcome refugees, and the resources to prepare for the climate challenges that lie ahead. This city will be better for all of us, and it will take courage, determination, and a bigger Budget, to make it happen.

This blog was updated on Friday, February 2nd, to include more information on the property tax increase and how it impacts multi-residential buildings.