Childcare and student nutrition
Low-cost childcare spots:
High-quality and affordable childcare promotes healthy child development, though many families in Toronto cannot afford childcare. The City of Toronto provides subsidies to some of these families, though there are many more families who do not receive a childcare subsidy.
There are 28,975 childcare subsidies in Toronto paid for jointly by the City, the province, and the federal government. The cost per child care subsidy in 2018 is $41.40 per day or $10,805 per year. In 2018, the City is expected to contribute $80.58m through property taxes, roughly 15% of total gross expenditures. The City’s contribution is estimated to fully fund roughly 7,500 low-cost childcare spaces at $10,805 per space per year.
Childcare subsidy costs were generously provided by Toronto Children’s Services staff
$81m in City property tax contribution for child care delivery is estimated to cover ~7,500 spaces at $10,805 per year
Student nutrition and breakfast programs:
Student nutrition programs help children be ready to learn in the classroom. Research shows that in school meal programs are a cost-effective tool for improving child education outcomes and lowering inequities between students of different socio-economic statuses.
Student nutrition programs in Toronto are community-based programs not operated by the City of Toronto. The City of Toronto contributes a portion of the funds that are required to operate student nutrition programs. In 2018, the City is expected to contribute $14.36m, roughly 19% of total program costs. The balance of funding is from other sources including provincial, corporate, fundraising, and parental contributions. A significant amount of the local program budget is unfunded and programs adjust their level of service delivery to reach the same number of students with a lower service level (e.g. smaller food portions, etc.) The Student Nutrition Program in 2018 is expected to provide meals to 205,000 children and youth.
Based on $75m total Student Nutrition Program (SNP) budget (including all source contributions, for food and other costs) for 200,500 students in Toronto as shown in the 2018 operating note
Therefore, $75m / 200,500 = $374 per student
Therefore, $14.36m City of Toronto funding contribution is estimated to fully fund ~40,000 students (rounded from 38,395)
*2018 Operating Budget Notes – City of Toronto, Toronto Public Health and information from Toronto Public Health staff
Housing and Homelessness
Rent Supplements to Low-income Households
Having appropriate and affordable housing is one of the largest determinants of health. When people cannot afford rent, their health and well-being suffer. An inability to afford decent and stable housing significantly affects mental health, life stability, employment, and education. Rent supplements are subsidies paid to families who cannot afford market rents. They have the effect of lowering household’s housing costs and thus increase affordability. Rent supplements are estimated at $400 per month on average with no administration costs.
Greg Suttor, PhD (Wellesley Institute Senior Researcher)
Building New Affordable Rental Housing
City of Toronto Contribution
Non-market housing charges rent depending on households’ ability to pay. Affordable housing reduces households housing costs, freeing up more resources for the other necessities of a healthy life, such as adequate nutrition. Reducing housing costs can raise households out of poverty, and improve family and child health.
The City of Toronto contributes capital grants out of its operating budget to assist non-market housing construction. A level of $80,000 in equity per unit is used here. This takes into account that federal and provincial contributions in housing allowances or capital grants pay for the remainder of costs.
Greg Suttor, PhD (Wellesley Institute Senior Researcher)
Emergency Shelter Beds
Homelessness is the most extreme example of how housing impacts health. People experiencing homelessness have much worse health outcomes and significantly shorter life expectancies.
The City of Toronto currently has over 5,000 permanent emergency and transitional shelter beds across 62 locations, 10 of which are City owned. Total operating impact of 1,000 new shelter beds including debt financing cost is estimated at $44m.
Based on $2.181 expansion of 53 additional shelter beds included in the 2018 operating note
Therefore, $2.181m / 53 = $41,150 per new shelter bed
Therefore, 1,000 shelter beds = $41m
Based on ~$38.343m total operating impact of 880 new spaces (minus 2021 costs, and respite centre costs) included in 2018 briefing note
Therefore, $38.343m / 880 = $43,571 per new shelter bed
Therefore, 1,000 shelter beds = $44m
Parks and Recreation
Recreation Program Subsidies for Low-income Households
The Welcome Program provides subsidies to low-income households so that they can affordably access recreation activities.
This program funded 93,000 program space subsidies at a cost of $8 million in 2018.
Recreation Program Spaces
Recreation programs promote population health through increased physical activity and social inclusion. There is currently a waitlist of 198,000 program spaces. A program space subsidy is estimated on average at $200 net of user fees.
Well-maintained parks and green spaces can improve the mental and physical health of users and nearby residents.
The City of Toronto spent $155 million on parks maintenance in 2018.
Transit and Congestion
Change TTC Fares
Transit impacts the daily experience of life for many Torontonians. Longer and more expensive transit commutes are more stressful and take up more resources. Lower-income households are more likely to take transit and are also more financially burdened relatively by flat TTC fares.
TTC fares raised $1,243 million in 2016 and paid for 63% of the TTC operations. Revenue from a $0.10 fare change is estimated at $36m using the lower end of the revenue change range identified by the TTC for 2016. This 2016 TTC estimate examined the revenue impact of raising fares for most fare media including single cash fares and Metropasses. No demand elasticity is included in this estimate and simple linear scaling was used for larger fare changes.
Discount Metro Passes
Fair Pass: Transit Fare Equity Program for Low-Income Torontonians
Low-income transit users pay the highest TTC fares relative to their income. There is no discount for non-student, non-senior low-income transit riders, and this group is more likely to use cash fares and be unlikely to afford the large up-front cost of a Metropass. The Fair Pass Program provides discounted Metropasses to those living on low incomes to increase progressivity and mobility.
Options included here include Phase 1 and Phase 3 of the Fair Pass Program included in the 2016 report for action. Phase 1 includes only those receiving Ontario Disability Support Program and Ontario Works benefits. Phase 3 extends eligibility to all Toronto residents living with an income below the Low-Income Measure +15%. Costs are estimated at full implementation, which the City Manager estimated at 193,000 recipients for both phases inclusive.
Improve Bus Frequency
Buses are the workhorses of the TTC. They are particularly important for inner-suburban and priority low-income neighbourhoods. Improving bus transit is also one of the fastest acting and cheapest ways to improve transit.
Police and Emergency Services
Change Police Budget
Emergency services including the police affect the safety and security of Torontonians. The police services budget is $1.136 billion gross in 2018 and includes a uniformed officer strength of 4,870.
Budget cuts and increases are based on percentages of the $1.136 billion budget for 2018.
Increase Fire Prevention & Public Education Budget
Fire prevention and public education programs are proactive programs designed to educate the public, in particular, vulnerable groups such as seniors and children, to recognize hazardous situations and prevent fires.
Expand the Community Paramedicine at Home Program
This program expansion provides for 5 more Community Paramedics and 4 more vehicles to provide community and home paramedicine coverage across the City 24 hours a day, 7 days a week. Currently, this program operates from 6:00 am to 4:00 pm, which leaves significant gaps in service delivery. The cost of this program expansion is rounded up to $1 million from $0.355 million as this is the minimum cost for budget builder proposals.
Revenue Tools and Taxes
Seventy percent of the services provided by the City of Toronto are paid for directly through Toronto taxes and user fees. Under The City of Toronto Act (COTA), 2006 the City has a number of taxation powers that it does not currently employ. The tax mix can be altered in this section.
Property taxes are the single largest revenue source for the City of Toronto. Property taxes in Toronto will raise over $4 billion in 2018, and pay for 38% of the City budget. This equates to the average homeowner in Toronto with a property valued at $625,000 paying an annual property tax bill of $2,906. Property taxes are highly visible for landowners, with a significant bill paid once per year. This visibility is one of the primary reasons for the strong opposition to property taxes. Renters also pay property taxes, though they are hidden within rents, and generally understood to be passed along from landlords to tenants where possible.
Property taxes are generally considered economically efficient taxes and a good base for municipal budgets. They provide for services directly affecting the property, and as well are difficult to avoid. There is some disagreement on whether cities larger than a certain size should rely heavily on property taxes or have a wider mix of taxes. There is some disagreement on the progressivity of Toronto property taxes (see Slack and Bird 2015). For more information on property taxes in theory and practice, see Slack and Bird 2011.
The base budget used here, being based on the 2018 Staff Recommended Operating Budget, includes a 2.1% property tax increase distributed over commercial, residential, multi-residential, and industrial categories with the goal of reducing the discrepancies largely due to the lower mill rates on residential property.
A 1% increase in property taxes is estimated here to raise $26.4 million, the estimate cited in the KPMG Revenue Options Study in 2016. No demand elasticity is included in this estimate and simple linear scaling was used changes.
Municipal Land Transfer Tax
The Municipal Land Transfer Tax (MLTT) is a tax on the transfer of real estate properties in the City of Toronto. This tax was first implemented in 2008. For most homes, this tax is around 2% of the value of the home or around $12,500 on a $625,000 property transaction. As the value of properties in Toronto increased the importance of the MLTT in the overall City of Toronto budget has increased, constituting $808m in revenue in 2017. Percentage changes are based on this revenue. No demand elasticity is included in this estimate and simple linear scaling was used changes. There is some debate on the whether the MLTT has decreased liquidity and the number of transactions in the Toronto housing market (see Haider et al. 2016). MLTT revenue is cyclical and based on the number and value of property transactions in Toronto. Residential home transactions are particularly important. The rapid growth in MLTT revenue is not expected to continue indefinitely, and under recession circumstances revenue could be expected to drop considerably. This could cause severe fiscal circumstances for the Toronto budget during the next recession.
Revenue tool options currently available to the City of Toronto
The City of Toronto Act, 2006, provides the City with a number of taxing powers that it does not currently use and which most municipalities do not have.
Alcohol Tax at 5%. As examined in the KPMG City of Toronto Revenue Tools Options Study 2016, this tax would only apply to off-license shops, that is shops that sell alcohol to-go, namely the LCBO, Beer Store, and wine shops. Applying this tax to bars and restaurants would drastically increase the complexity and revenue lost in collection. An alcohol tax could have a number of effects, including increasing the cost of alcohol, decreasing alcohol consumption, and decreasing damage due to alcohol. It can also be expected to have negative impacts on businesses that rely on alcohol sales, and can create inefficient border effects, encouraging consumers to travel outside of the city to purchase alcohol at a relative discount.
An alcohol surtax can be expected to be mildly economically regressive, as lower-income households on average spend a slightly higher portion of their total income on alcohol. This relationship between lower income and higher relative alcohol spending should not be overstated. It is not consistent across all of the Canadian income quintiles, and the difference is only two-tenths of one percent of total expenditure from the richest 20 percent of Canadians to the poorest 20 percent. How the revenue from an alcohol tax is spent would significantly affect how progressive or regressive such as tax would be. If spent on programs that benefit the lower income quintiles more than the higher income quintiles, on the whole, the tax could be economically progressive, having a role in decreasing economic inequality in Toronto. As well, price increases decrease alcohol consumption more amongst lower-income households than higher income households, and so can benefit health equity by decreasing the differences in health between higher and lower income households. For more information see Leon 2016.
Tobacco Tax at 5%. This tax would apply to tobacco products sold within the limits of the City of Toronto. A tobacco tax could have a number of effects, including increasing the cost of tobacco, decreasing tobacco use and consumption, and decreasing damage due to tobacco use, which is a leading cause of preventable deaths and health inequities across income quintiles. It can be expected to have negative impacts on businesses that rely on tobacco sales, and can create inefficient border effects, encouraging consumers to travel outside of the city to purchase tobacco at a relative discount.
A tobacco tax can be expected to be directly economically regressive, as lower-income households on average spend a significantly higher portion of their total income on tobacco products. Progressivity of tobacco taxes can be complicated or ameliorated by the allocation of revenue in ways that directly benefit households in lower income quintiles over higher income quintiles. If revenue is spent in ways that specifically benefit lower-income households the net effect of tobacco taxes could be progressive on the whole. This spending side mechanism could be crucial for offsetting the regressive nature of a tobacco tax. For more information see Leon 2016.
Vehicle Registration Tax at $60/car/year. This tax would apply to motor vehicles owned by residents of the City of Toronto and be paid at the time of registration. A vehicle registration tax could have a number of effects, including increasing the cost of owning a motor vehicle in the City of Toronto, decreasing the ownership rate of motor vehicles in the City of Toronto, and perhaps decreasing air pollution from motor vehicles in the City of Toronto, though these relationships are mediated by a number of factors.
A vehicle registration tax would be linked to ownership of motor vehicles and residency in Toronto rather than income and thus would be economically regressive. Lower income people in general spend less relative income on private vehicle transportation than middle-income groups, and rely more on urban public transportation than all the other income groups. How the revenue raised from a vehicle registration tax is spent would have significant effects on the regressivity of such a tax. For more information see Leon 2016.
Non-residential Parking Tax at $100/spot/year. This tax would apply to all non-residential parking spots in the City of Toronto, and would be paid for by the owner of the parking space. A non-residential parking tax could have a number of effects, including increasing the cost of parking, reducing the rate of vehicle parking, and reducing the number of parking spots in Toronto. It could decrease the number of vehicles and air pollution in the City by increasing the cost of parking, though these relationships are mediated by a number of factors.
A non-residential parking tax would be expected to have significant negative effects and/ or costs for businesses that own large numbers of parking spots, and those that rely on customers who drive for shopping, such as large shopping malls and grocery stores. Such a tax could lead to the conversion of free-for-customer parking into paid parking, which would increase the visibility of the costs of parking and thus could be expected to discourage driving and parking. The costs of a parking tax could also alternatively or partially be rolled into the cost of goods and services sold by affected businesses.
A non-residential parking tax would be linked to consumption of parking rather than income and thus would be economically regressive. How the revenue raised from a vehicle registration tax is spent would have significant effects on the regressivity of such a tax. For more information see Leon 2016.
Empty Homes Tax. See EX26.4 Implementing a Vacant Home Tax in Toronto, City of Toronto 2017
Options requiring provincial approval
Implementing these taxes and revenue tools would require the permission of the Province of Ontario.
Gardiner and DVP Highway Tolls at $.10/ km.
Establish 0.5% Toronto Sales Tax.
Establish 1% Toronto Income Tax.
Establish 0.5% Toronto Business Profit Tax.