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Following a decade of deliberation, uncertainty, and stalled progress regarding the City of Toronto's introduction of wide-ranging new revenue tools, Mayor John Tory has announced a plan to introduce road tolls on the Don Valley Parkway (DVP) and the Gardiner Expressway. Expected to garner an annual $200 million, the $2 tolls would be paid by both 416 residents and visitors to the City of Toronto.
Speaking at the Toronto Region Board of Trade, Tory stressed that the funds generated would allow the City to move forward with an infrastructure deficit estimated at $33 billion. "The money raised though these toll would be directly invested in transit expansion," the Mayor explained.
In addition to unfunded transit projects like the Relief line, the Waterfront LRT, the eastern extension of the Crosstown LRT, and—more vaguely—SmartTrack, Tory noted that the funds would be used to match the Federal government's $840 million contribution towards state of good repair funding for Toronto transit. "We have to match it," Tory said, acknowledging that the receipt of Federal funds is contingent on an equal contribution from the City of Toronto.
Alongside the much-needed transit improvements, Tory added that the City requires significant new investment in affordable housing, as well as an additional $250 million for "new and improved long-term care homes." Finally, the Mayor highlighted that a "$332 million contribution to flood-protecting the Port Lands" is also urgently needed, with the City currently lacking significant revenue tools beyond property taxes.
Anticipation of Tory's proposal triggered an immediate firestorm of both criticism and support. As Chief Planner Jennifer Keesmaat pointed out on Twitter, the use of road tolls on major highways is already "a well established practice in most large American cities."
In addition to the road tolls, Tory has also endorsed ending the tax rebate for vacant commercial and industrial properties. "When it was first created this idea made some sense—it was a promise to help our businesses through recessionary times," the Mayor noted, while arguing that "almost 50 percent" of those payments have gone towards empty office space in the now-thriving Downtown core. According to the Mayor, the rebate amounted to $367 million from 2011-2013, with the removal projected to net some $22 million in yearly revenue.
A long-touted hotel tax was also endorsed by Tory. The Mayor argued that it's fair for visitors to the City to contribute to services and infrastructure, with the same logic applied to the road toll, which would require commuters from outside the 416 to contribute towards the City of Toronto-funded infrastructure used on a daily basis.
Tory's announcement follows the recent release of City Manager Peter Wallace's report to the Executive Committee, titled "The City of Toronto's Immediate and Longer-term Revenue Strategy Direction." While the road toll is also endorsed in the report—along with a number of additional revenue tools—a toll of "[u]nder $2 per trip" is expected to only generate up to $166 million per year.
A 5% levy on property taxes is also recommended, though Tory today argued that any increase greater than the rate of inflation would be unfair to residents. According to the report, the levy could net an additional $126 million in annual revenue.
Alongside the road toll and property tax levy—both of which would go toward a dedicated fund, not the City's Operating Budget—Wallace's report also endorses the re-instatement of the Miller-era Vehicle Registration Tax, which was swiftly removed by Mayor Rob Ford. While Ford's much-publicized renunciation of the Vehicle Registration Tax arguably contributed to making the use of expanded revenue tools politically untenable, the re-instituted tax could yield $100 million per year.
While the Mayor's announcement does not follow through with the full set of the City Manager's recommendations, Tory has nonetheless moved to make greater use of the expanded powers granted to the City through 2006's City of Toronto Act (CoTA). Property taxes have long remained practically the sole source of revenue for the cash-strapped City, and the introduction of new revenue streams could see Toronto take a decisive step towards generating the funds necessary to pay for new transit and infrastructure.
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