Members of Council and Staff:  Please keep this agenda and the accompanying material until the City Council meeting dealing with these matters has ended.  The City Clerk’s Office will not provide additional copies.

Special Assistance for Members of the Public:  City staff can arrange for special assistance with some advance notice.  If you need special assistance, please call (416-392-5227), TTY 416‑338-0889 or e-mail buc@toronto.ca.

Closed Meeting Requirements:  If the Budget Committee wants to meet in closed session (privately), a member of the committee must make a motion to do so and give the reason why the Committee has to meet privately. (City of Toronto Act, 2006)

Notice to people writing or making presentations to the Budget Committee:  The City of Toronto Act, 2006 and the City of Toronto Municipal Code authorize the City of Toronto to collect any personal information in your communication or presentation to City Council or its committees.

The City collects this information to enable it to make informed decisions on the relevant issue(s). If you are submitting letters, faxes, e‑mails, presentations or other communications to the City, you should be aware that your name and the fact that you communicated with the City will become part of the public record and will appear on the City’s website. The City will also make your communication and any personal information in it – such as your postal address, telephone number or e-mail address – available to the public, unless you expressly request the City to remove it.

The City videotapes committee and community council meetings. If you make a presentation to a committee or community council, the City will be videotaping you and City staff may make the video tapes available to the public.

If you want to learn more about why and how the City collects your information, write to the City Clerk’s Office, City Hall, 100 Queen Street West, Toronto ON M5H 2N2 or by calling 416-392-7340.

Declarations of Interest under the Municipal Conflict of Interest Act

Communications/Reports

The Budget Committee recommends the following to Executive Committee for recommendation to Council that:

1.         City Council approve the 2010 Budget Committee Recommended Tax Supported Operating Budget of $9.214 billion gross and $3.534 billion net as detailed in Appendix 1, comprised of the following:

i.          a Base Budget of $9.158 billion gross and $3.532 billion net to maintain existing services and service levels; and

ii.         an investment in strategic new and enhanced service priorities of $56.255 million gross and $2.606 million net.

2.         City Council approve the introduction of new user fees and charges, and changes to the rates of existing user fees and charges included in the 2010 Budget Committee Recommended Operating Budgets of City Programs, Agencies, Boards and Commissions which will generate incremental revenues totalling $15.598 million.

3.         City Council approve the use of $275.721 million from the 2009 Operating Surplus to fund the 2010 Operating Budget.

4.         City Council approve the 2010 sinking fund levies of $147,506,495.33 for the City of Toronto and $2,293,802.99 for the Toronto District School Board.

5.         City Council approve the Recommendations for City Programs, Agencies, Boards and Commissions detailed in Appendix 3 of the report:

Citizen Centred Services - A

311 Customer Service Strategy

1.         City Council approve the 2010 Recommended Operating Budget for 311 Customer Strategy of $17.500 million gross and $9.272 million net, comprised of the following services:

Affordable Housing Office

2.         City Council approve the 2010 Recommended Operating Budget for the Affordable Housing Office of $3.223 million gross and $1.334 million net, comprised of the following services:

Children’s Services

3.         City Council approve the 2010 Recommended Operating Budget for Children’s Services of $378.708 million gross and $70.776 million net, comprised of the following:

4.         The information contained in confidential attachment 1 remain confidential until the outcome of Council’s decision has been communicated to the Unions and affected staff.

5.         City Council approve the following recommendations contained in the report (February 1, 2010) from the General Manager of Children’s Services, entitled “Child Care Development in Thorncliffe Park School”:

a.         approve funds of up to $3.8 million for the construction of a new child care centre at Thorncliffe Park Elementary School, 80 Thorncliffe Park Drive, to be funded from the Child Care Capital Reserve Fund

b.         the General Manager of Children's Services Division be delegated authority to negotiate and execute agreements on behalf of the City with the Toronto District School Board for the design and construction of this project, and such agreements to be on terms and conditions satisfactory to the General Manager and the City  Solicitor

6.         The General Manager of Children's Services continue to work with the Province on a funding strategy to address funding pressures on base service delivery, on the elimination of the National Child Care strategy, the elimination of Best Start funding and the introduction of the new Early Learning Program (ELP) on the City, and report to Community Development and Recreation Committee, and Budget Committee in June 2010, on the outcome.

Court Services

7.         City Council approve the 2010 Recommended Operating Budget for Court Services of $52.080 million gross and ($10.082) million net revenue, comprised of the following services:

8.         The Director of Court Services continue to work with the Province and advocate to implement Bill 212 amendments available under the Good Government Act, 2009 by mid 2010 to reduce the requirement of police officers appearing at trials, improve public service access and to introduce other changes that can result in higher fine collection results.

Economic Development and Culture

9.         City Council approve the 2010 Recommended Operating Budget for Economic Development and Culture of $35.914 million gross and $26.406 million net, comprised of the following services:

10.       The General Manager of Economic Development and Culture report to Budget Committee on a plan for managing Nathan Phillips Square by June 2010.

Emergency Medical Services

11.       City Council approve the 2010 Recommended Operating Budget for Emergency Medical Services of $165.266 million gross and $65.647 million net, comprised of the following services:

12.       City Council request the Province to provide its full share of 100% funding for Emergency Medical Services’ Central Ambulance Communication Centre (CACC) and Systems Services.

13.       The General Manager of Emergency Medical Services negotiate with the Ministry of Health and Long Term Care to continue the EMS Nurses Initiative beyond March 2011 at 100% Provincial funding and to report back on the outcome during the 2011 budget process.

14.       The information contained in confidential attachment 1 remain confidential until the outcome of Council's decision has been communicated to the Unions and affected staff.

Long-Term Care Homes & Services

15.       City Council approve the 2010 Recommended Operating Budget for Long-Term Care Homes & Services of $220.626 million gross and $46.773 million net, comprised of the following services:

16.       Council approve the new Nutrition and Dietetic services enhancements as required by the Long-Term Care Homes Act Draft Regulation, ($0.803 million gross, $0 net), subject to Provincial funding.

17.       The information contained in confidential attachment 1 remain confidential until the outcome of Council's decision has been communicated to the Unions and affected staff.

Parks, Forestry and Recreation

18.       City Council approve the 2010 Recommended Operating Budget for Parks, Forestry and Recreation of $359.881 million gross and $260.623 million net, comprised of the following services:

19.       The General Manager of Parks, Forestry and Recreation allocate available Welcome Policy funding by season, proportional to seasonal registration to a maximum of the budgeted Welcome Policy funding of $8.000 million.

20.       The General Manager of Parks, Forestry and Recreation report, prior to the 2011 budget process, on a strategy for converting the Welcome Policy program from ‘program-based’ into ‘dollar-based’ subsidy.

21.       The General Manager of Parks, Forestry and Recreation report early in 2011 on the development of a strategy for the equitable distribution of all recreation subsidies to children and youth, adults and seniors proportionate to the number of low income residents in each Ward.

22.       Parks, Forestry and Recreation review future impacts of capital projects on operating budgets and consider strategies, including optional models for service delivery, to mitigate future operating budget impacts.

23.       The information contained in Confidential Attachment 1 remain confidential until the outcome of Council’s decision has been communicated to the Unions and affected staff.

Shelter, Support & Housing Administration

24.       City Council approve the 2010 Recommended Operating Budget for Shelter,  Support and Housing Administration of $854.683 million gross and $258.680 million net, comprised of the following services:

Social Development, Finance & Administration

25.       City Council approve the 2010 Recommended Operating Budget for Social Development, Finance and Administration of $24.688 million gross and $13.272 million net, comprised of the following services:

Toronto Employment and Social Services

26.       City Council approve the 2010 Recommended Operating Budget for Toronto Employment and Social Services of $1,358.108 million gross and $324.596 million net, comprised of the following services:

Citizen Centred Services - B

City Planning

27.       City Council approve the 2010 Recommended Operating Budget for City Planning of $36.182 million gross and $13.222 million net, comprised of the following service:

28.       City Planning’s Application Revenues for Community Planning and Committee of Adjustment applications be decreased by $1.429 million in 2010 based on application volume and application mix trends experienced from 2004 to 2009, showing a significant reduction in both volume and revenue per application beginning in 2007.

29.       The Deputy City Manager responsible for City Planning report back to the Budget Committee in 2010 on the results of the detailed review of development application costs and an approach to increasing community planning and development application process fees in the future to allow for full cost recovery of all City wide costs related to the processing of community planning and development applications.

Fire Services

30.       City Council approve the 2010 Recommended Operating Budget for Fire Services of $371.741 million gross and $359.141 million net, comprised of the following services:

31.       City Council approve the following recommendations contained in the report (February 11, 2010) from the Fire Chief and General Manager of Toronto Fire Services, entitled “Change False Alarm By-law to allow Fire Services to Charge for Attendance at all Nuisance and Malicious False Alarms”:

a.         Appendix B - Schedule 1, Fire Services of Chapter 441, Fees, of the Municipal Code be amended to require Owners to pay a fee of $350.00 per hour for each fire vehicle dispatched in response to the first and subsequent malicious false alarms, in respect of the same address, per year, and to require Owners to pay a fee of $350.00 per hour for each fire vehicle dispatched in response to the first and subsequent nuisance false alarms, in respect of the same address, per year.

Municipal Licensing and Standards

32.       City Council approve the 2010 Recommended Operating Budget for Municipal Licensing and Standards of $50.209 million gross and $19.226 million net, comprised of the following services:

33.       That the Animal Services Council Reference Group be requested to consider within the strategic planning process that is underway the following:

a.         strategies to ensure that revenue targets around licensing are met;

b.         additional revenue options such as:

i.          dog adoption fees;

ii.         rental of traps;

iii.        cremation and euthanasia services;

iv.        dead animal pick-up on private property;

v.         fundraising.

Policy, Planning, Finance and Administration

34.       City Council approve the 2010 Recommended Operating Budget for Policy, Planning, Finance and Administration (PPF&A) of $24.966 million gross and $12.014 million net, comprised of the following services:

35.       The information contained in confidential attachment 1 remains confidential until the outcome of Council’s decision has been communicated to the Unions and affected staff.

Technical Services

36.       City Council approve the 2010 Recommended Operating Budget for Technical Services of $67.682 million gross and $12.207 million net, comprised of the following services:

Toronto Building

37.       City Council approve the 2010 Recommended Operating Budget for Toronto Building of $45.830 million gross and ($10.801) million net, comprised of the following service:

Toronto Environment Office

38.       City Council approve the 2010 Recommended Operating Budget for Toronto Environment Office of $12.758 million gross and $3.372 million net, comprised of the following service:

Transportation Services

39.       City Council approve the 2010 Recommended Operating Budget for Transportation Services of $285.660 million gross and $180.815 million net, comprised of the following services:

Waterfront Secretariat

40.       City Council approve the 2010 Recommended Operating Budget for Waterfront Secretariat of $1.547 million gross and $0.957 million net, comprised of the following service:

41.       The Deputy City Manager responsible for the Waterfront Secretariat and the Deputy City Manager and Chief Financial Officer report back to the Executive Committee on the updated Operating Budget Impacts of New Waterfront Infrastructure in time to inform the preparation of the 2011 Operating Budget.

INTERNAL SERVICES

Facilities and Real Estate

42.       City Council approve the 2010 Recommended Operating Budget for Facilities and Real Estate of $169.629 million gross and $54.262 million net, comprised of the following services:

43.       The information contained in confidential attachment 1 remain confidential until the outcome of Council's decision has been communicated to the Unions and affected staff.

Fleet Services

44.       City Council approve the 2010 Recommended Operating Budget for Fleet Services of $47.292 million gross and $0.0 million net, comprised of the following services:

45.       Fleet Services continue to review the size of the City’s fleet inventory and report back with further budgetary savings for consideration with the 2011 budget process.

Information and Technology

46.       City Council approve the 2010 Recommended Operating Budget for Information and Technology of $85.708 million gross and $61.524 million net, comprised of the following services:

Office of the Chief Financial Officer

47.       City Council approve the 2010 Recommended Operating Budget for the Office of the Chief Financial Officer of $15.512 million gross and $8.928 million net, comprised of the following services:

Office of the Treasurer

48.       City Council approve the 2010 Recommended Operating Budget for the Office of the Treasurer $75.671 million gross and $29.482 million net, comprised of the following services:

City Manager’s Office

49.       City Council approve the 2010 Recommended Operating Budget for the City Manager’s Office of $41.754 million gross and $37.079 million net, comprised of the following services:

50.       The information contained in confidential attachment 1 remain confidential until the outcome of Council's decision has been communicated to the Unions and affected staff.

OTHER CITY PROGRAMS

City Clerk’s Office

51.       City Council approve the 2010 Recommended Operating Budget for the City Clerk’s Office of $60.164 million gross and $36.793 million net, comprised of the following services:

City Council

52.       City Council approve the 2010 Recommended Operating Budget for City Council of $20.337 million gross and $19.637 million net, comprised of the following services:

Legal Services

53.       City Council approve the 2010 Recommended Operating Budget for Legal Services of $39.538 million gross and $19.993 million net, comprised of the following services:

Mayor’s Office

54.       City Council approve the 2010 Recommended Operating Budget for the Mayor’s Office of $2.561 million gross and net, comprised of the following service:

ACCOUNTABILITIES OFFICES

Auditor General’s Office

55.       City Council approve the 2010 Operating Budget for the Auditor General’s Office of $4.283 million gross and $4.283 million net, comprised of the following service:

Accountability Offices (Excluding The Auditor General’s Office)

56.       City Council approve the 2010 Recommended Operating Budget for the Accountability Offices (excluding the Auditor General's Office) of $2.465 million gross and net, comprised of the following offices:

57.       The Lobbyist Registrar submit a report to the Executive Committee on a full cost-recovery fee plan for the 2011 budget process.

AGENCIES, BOARDS & COMMISSIONS

Arena Boards of Management

58.       City Council approve the 2010 Recommended Operating Budget for the Arena Boards of Management of $6.396 million gross and $(0.006) million net, comprised of the following services:

Association of Community Centres

59.       City Council approve the 2010 Recommended Operating Budget for the Association of Community Centres of $7.370 million gross and $7.180 million net, comprised of the following services:

60.       The Executive Director of Social Development and Administration, along with Financial Planning staff, and in consultation with the Executive Director of Applegrove Community Complex, undertake a review of operational sustainability of the Applegrove Community Complex, including strategies to address the 2011 budget target before the 2011 Operating Budget process.

Exhibition Place

61.       City Council approve the 2010 Recommended Operating Budget for Exhibition Place of $62.928 million gross and $0.026 million net, comprised of the following services:

62.       City Council approve amendments to Municipal Code Chapter 227, Schedule 14 and to the loan agreement dated January 12, 2009 between the Board of Governors of Exhibition Place and the City of Toronto, to revise the purpose of the “Exhibition Place Conference Centre Reserve Fund” to “Provides a source of funding for any shortfalls in loan payments to the City from Exhibition Place for the new conference centre or to support Exhibition Place’s operating shortfalls between 2010 and 2012, to a maximum of $0.900 million”.

Heritage Toronto

63.       City Council approve the 2010 Recommended Operating Budget for Heritage Toronto of $0.713 million gross and $0.366 million net, comprised of the following service:

Parking Tag Enforcement & Operations

64.       City Council approve the 2010 Recommended Operating Budget for Parking Tag Enforcement & Operations of $54.620 million gross and $(26.054) million net, comprised of the following services:

65.       City Council request the Province to increase the regulated administration fee applied to defaulted parking tags and that the Province consider a revenue-sharing agreement with the City for the increased fee value.

66.       City staff work closely with and monitor the Province’s progress in drafting new regulations to the Provincial Offences Act to include changes that no longer require an officer to appear in court to give evidence at parking ticket trials.

67.       City staff report back on strategies and initiatives to mitigate expenditure increases and maintain revenues in time for the 2011 Operating Budget Process.

Theatres

68.       City Council approve the 2010 Recommended Operating Budget for Theatres of $20.617 million gross and $3.488 million net, comprised of the following services:

Toronto and Region Conservation Authority

69.       City Council approve the 2010 Recommended Operating Budget for Toronto and Region Conservation Authority of $35.583 million gross and $7.298 million net, of which $4.207 million is a contribution from Toronto Water and $3.269 million is tax-supported, which is comprised of the following services:

70.       The information contained in Confidential Attachment 1 remain confidential until the outcome of Council’s decision has been communicated to the Unions and affected staff.

Toronto Atmospheric Fund

71.       City Council approve the 2010 Recommended Operating Budget for Toronto Atmospheric Fund of $2.236 million gross and $0 million net, comprised of the following service:

72.       The Toronto Atmospheric Fund provide a quarterly variance report through 2010 to monitor investment income performance and third party fundraising activities.

Toronto Police Service

73.       City Council approve the 2010 Recommended Operating Budget for The Toronto Police Service of $953.844 million gross and $888.089 million net, comprised of the following service:

74.       City Council approve an increase of 80 (including 38 current transit officers) additional uniform positions required for public transit policing, for a revised uniform establishment of 5,588 for the Toronto Police Service.

75.       City Council join with the Toronto Police Services Board in advocating for the Federal government to assume its share of the costs of policing.

76.       City Council request the City Manager and the City’s Chief Financial Officer to meet with the Chief of Police and the Toronto Police Services Board prior to the commencement of the 2011 operating budget process, to consider the impact of the 2010 operating budget.

77.       City Council request the City Manager and the Chief Financial Officer to work with the Chief of Police and the Board to develop a process for multi-year financial planning and forecasting.

78.       City Council conduct a review of applicable City by-laws with a view to more cost effective use of police resources, as it relates to potential savings in the City budget.

79.       City Council request the City Manager and the Chief Financial Officer to review chargebacks, including cleaning services and legal services, in order to determine the most cost effective way of delivering services, while respecting any applicable collective agreements.

80.       City Council renew its consideration of cost recovery mechanisms related to the Entertainment District and other high risk licenses in order to cover costs of policing.

81.       City Council request the Deputy City Manager and Chief Financial Officer to provide a timetable for the  initiatives contained in the report (March 11, 2010) from the Acting Chair, Toronto Police Services Board, entitled "Toronto Police Service – 2010 Operating Budget Submission – Revised", as amended.

Toronto Police Services Board

82.       City Council approve the 2010 Recommended Operating Budget for The Toronto Police Services Board of $2.348 million gross and net, comprised of the following service:

Toronto Public Health

83.       City Council approve the 2010 Recommended Operating Budget for Toronto Public Health of $219.539 million gross and $44.162 million net, comprised of the following services:

84.       The information contained in confidential attachment 1 remain confidential until the outcome of Council's decision has been communicated to the Unions and affected staff.

Toronto Public Library

85.       City Council approve the 2010 Recommended Operating Budget for Toronto Public Library of $180.781 million gross and $167.094 million net, comprised of the following service:

86.       The Toronto Public Library Board report to Budget Committee in August 2010 with specific sustainable budget reductions and associated service impacts to accommodate the $0.443 million gross and net unallocated reduction included in Toronto Public Library 2010 Recommended Operating Budget.

87.       The Toronto Library Board report to Budget Committee on the Special Sick Leave Pay-out cost estimates for 2010 resulting from the implementation of the new Illness or Injury Plan, once the financial impact is known.

Toronto Transit Commission

88.       City Council approve the 2010 Recommended Operating Budget for the TTC of $1.371 billion gross and $429.804 million net, comprised of the following service:

89.       City Council approve the 2010 Recommended Operating Budget for Wheel-Trans of $87.433 million gross and $82.676 million net, comprised of the following service:

90.       The Chief General Manager of the Toronto Transit Commission report to Budget Committee by June of 2010 on any adjustments to ridership projections or passenger revenue based on actual 2010 ridership and revenues to date, and that the TTC identify mitigation strategies including service changes if experience indicates lower than budgeted ridership in 2010;

91.       City Council approve the recommendations contained in Confidential Attachment II and that the recommendations remain confidential until the outcome of Council's decision has been communicated to the Union and affected staff;

92.       The Chief General Manager of the Toronto Transit Commission report to Budget Committee in the Spring of 2010 with five-year ridership and service delivery plans for the TTC and Wheel-Trans that will include various options for a multi-year fare strategy;

93.       The Chief General Manager of the Toronto Transit Commission report back to the Budget Committee prior to the start of the 2011 Operating Budget process on the impact of the Health and Wellness Program on absenteeism and associated savings;

94.       The Chief General Manager of the TTC report back to Budget Committee prior to the start of the 2011 Operating Budget process on the impact of the Health and Safety Initiative and the Work Safe – Home Safe program;

95.       A long-term TTC subsidy receivable of $25.750 million be created, representing the value of expected future TTC accident claim expenses and a long-term Wheel-Trans subsidy receivable of $0.325 million be created representing the value of expected future Wheel-Trans accident claim expenses;

96.       City Council approve the establishment of an additional long-term subsidy receivable in the amount of $17.6 million to cover post-retirement benefit non-cash expenses for the TTC for 2010 consistent with previous accounting treatment approved by Council and an additional long-term subsidy receivable in the amount of $0.83 million to cover post-retirement benefit non-cash expenses for Wheel-Trans for 2010 consistent with previous accounting treatment approved by Council;

97.       The Chief General Manager of the Toronto Transit Commission and the Deputy City Manager and Chief Financial Officer continue discussions on partnering with the Province for permanent sustainable funding in order to return the TTC’s provincial funding share to 50%, as it was prior to downloading;

98.       City Council request the Toronto Transit Commission to direct the Chief General Manager of the Toronto Transit Commission to ensure that all future budget submissions are in accordance with City of Toronto budget submission requirements that include compliance with all City financial/budgetary policies and provision of complete, detailed budget information in the format and standards set out by the City, to be made available within the timelines of the budget process review schedule, as assigned by the Financial Planning Division, to ensure appropriate time to review, assess and make recommendations and consolidate within the City of Toronto’s financial and budgeting systems.

Toronto Zoo

99.       City Council approve the 2010 Recommended Operating Budget for Toronto Zoo of $44.940 million gross and $11.000 million net, comprised of the following services:

Yonge-Dundas Square

100.     City Council approve the 2010 Recommended Operating Budget for Yonge-Dundas Square of $1.763 million gross and $0.544 million net, comprised of the following service:

NON-LEVY OPERATIONS

Toronto Parking Authority

101.     City Council approve the 2010 Recommended Operating Budget for the Toronto Parking Authority of $68.735 million gross and ($55.685) million net, comprised of the following services:

CORPORATE ACCOUNTS

Community Partnership & Investment Program

102.     City Council approve the 2010 Recommended Operating Budget for the Community Partnership and Investment Program of $46.913 million gross and $46.702 million net, comprised of the following services:

103.     The Glen Gould Foundation Award be transformed from the triennial grant of $0.015 million to an annual grant of $0.015 million commencing in 2010.

Capital and Corporate Financing/Non-Program Budget

104.     City Council approve the 2010 Recommended Operating Budget for Capital and Corporate Financing/Non-Program of $1,239.463 million gross and ($86.722) million net, comprised of the following:

105.     City Council approve the following recommendations contained in the report from the Deputy City Manager and Chief Financial Officer, entitled “Preliminary Operating Variance Report for the Year Ended December 31, 2009”, as amended by the Budget Committee at its meeting of March 12, 2010:

a.         approve the allocation of the 2009 preliminary year-end operating surplus of $354.817 million to the following: $0.156 million to the Exhibition Place Conference Centre Reserve Fund to guarantee repayment of a loan for a new conference centre; $2.958 million to the Social Assistance Stabilization Reserve Fund to offset future Toronto Employment & Social Services budget pressures and provide funding for the French Language Service Enhancement initiative for 2010; $275.721 million as Prior Year Surplus Revenue to fund the 2010 Operating Budget; and that the unapplied balance $75.982 million be transferred to the Property Tax Stabilization Reserve.

b.         approve the withdrawal of $1.3 million from the Building Code Act Service Improvement Reserve Fund to fund the net revenue shortfall for Toronto Building resulting from lower building permit volumes impacted by the economic downturn.

c.         approve that after funding the Green Lane Landfill Operations of $2.449 million, the $12.986 million of the Solid Waste Management Services’ 2009 preliminary net operating surplus be transferred to the Waste Management Reserve Fund.

d.         approve that $2.449 million be reimbursed to the Waste Management Reserve Fund when the Green Lane Landfill Operations generates a sufficient operating surplus.

e.         approve the budget adjustments including the approved position transfers as detailed in Appendix D to amend the 2009 Council Approved Operating Budgets between Programs with no net impact to the 2009 Tax-Levy Operating Budget.

f.          request the Deputy City Manager and Chief Financial Officer to report back to the Budget Committee on any changes to the City of Toronto’s 2009 year-end financial position after the 2009 financial statements are finalized.

6.         City Council approve the 2010 Budget Committee Recommended Operating Budget for the Toronto Parking Authority totalling $68.735 million gross and $55.685 million net.

7.         City Council receive the reports, transmittals and communications that are on file with the City Clerk’s Office (including Appendix 4 herewith attached) as considered by the Budget Committee at its 2010 budget review meetings.

2010 Operating Budget Summary

The 2010 Operating Budget is balanced and in accordance with directions issued by the City Manager, maintains and protects key services and service levels; keeps residential property tax increase to 2.9% and non-residential to 0.967%, resulting in a net increase on the total property tax base of 1.83%.  Investment in new/enhanced services has been constrained and where recommended, investment in new/enhanced services is mainly funded through partnerships and new user fees.  As a result, investment of $56.255 million in new/enhanced services only requires property tax funding of $2.606 million.

As shown in Chart 1 in the report, the 2010 Budget Committee Recommended Operating Budget is funded primarily by property taxes of $3.534 billion, user fees and charges of $1.351 billion; Provincial transfers of $1.849 billion; and Other Revenues of $1.621 billion.  In total, property tax revenues will increase by $96.1879 million in 2010.  Assessment growth represents $33.150 million of the increase with the remaining $63.039 million attributed to a 1.83% tax increase on the total property tax base, which translates into an average increase of $67.69 on the average household of $407,374.

How the 2010 Operating Budget was Balanced

Primarily driven by unsustainable strategies totalling $451 million (inclusive of $238 million of Provincial funding for transit debt service cost; $139 million of reserves and funds from Closed Capital Projects; and $74 million from 2008 Surplus), the City’s 2010 Outlook indicated a beginning budget pressure of $821 million.  This significant 2010 Outlook pressure was finalized in May, 2009, and prompted the City Manager and Deputy City Manager & Chief Financial Officer to institute a Four Point Plan with a goal of finding savings totalling $170 million in each of 2010 and 2011.

Table 1 in the report summarizes the strategies used to balance the 2010 Operating Budget.  As is evident in the table, City staff found sustainable strategies totalling $382 million.  Most significantly, staff achieved the reduction target established by the City Manager.  This resulted from a cost restraint initiative introduced in the fall of 2009; and a protracted service review process that realized significant efficiencies and service changes without compromising the city’s commitment to protect services that Toronto residents and businesses demand.  Other sustainable budget balancing strategies included the introduction of a transit fare increase which will raise additional revenues of $50 million; savings from the continued upload of provincial social services costs and the elimination of the funding cap on the cost of administration amounting to $119 million.

Unsustainable strategies totalled $343 million, comprised of the use of Prior Year Surplus of $276 million and contributions from reserves of $67 million.  As is evident in the 2009 Preliminary Year-end Variance Report, the surplus is mainly attributed to prudent financial management which resulted in wage settlement savings; reduced assessment appeals; higher interest and investment income; higher supplementary taxes and revenues from the municipal land transfer tax; along with savings derived from the 2009 labour disruption.

It is noted that the City did not receive assistance from the Province for transit operations in 2010.  However, negotiations with the Province will continue and it is expected that an agreement on long-term, sustainable transit funding will be reached by December 1, 2010.

The unsustainable strategies discussed above will contribute to a beginning budget pressure in 2011.  It is important to note that the unsustainable strategies of $343 million utilized to balance the 2010 Operating Budget are $108 million less than the $451 million utilized in 2009.  In part, this is attributable to the successful steps taken to address the City’s annual operating budget shortfall, which are discussed in greater detail in the Long Term Fiscal Plan.

Finally, increased property tax revenues of $96 million comprised of assessment growth of $33 million and a tax increase (2.9% on residential properties and 0.967% on commercial, industrial and multi-residential property classes) of $63 million ensured a balanced 2010 Operating Budget.

Where the 2010 Net Operating Budget Will be Spent

Chart 2 in the report shows where the property tax of $2,334.07 paid on the average house with an assessed value of $407,374 will be spent.  Approximately 25% or $605 will be spent on police services.  As the chart indicates, 78% of the property tax paid by residential taxpayers living in an average house will fund debt service cost for capital works to support key services, and City services such as Police and Fire protection; Transit, Employment and Social Services; and Parks, Forestry and Recreation.

Chart 3 in the report shows that more than two thirds of the 2010 Operating (Gross) Expenditure Budget of $9.214 billion will be spent on services that the City has either no direct control over or have significant implications if cut.  The emergency services (Fire, Police and Emergency Medical Services) account for 16%; Transit 16%; and the cost shared /Provincially Mandated Services account for another 33%.  Altogether, these services plus the repayment of debt principal and interest represent 70% of the City’s total expenditures.

2010 Budget Committee Recommended Net Operating Budget

The 2010 Net Operating Budget (or Property Tax Levy) is $3.534 billion, which represents an increase of $96.189 million or 2.8% over 2009.  As a proportion of the gross operating budget, the net budget financed from property taxes has declined consistently from a high of 46% in 1999 to 38% in 2010.  This reduced reliance on property taxes is consistent with the City’s strategic direction toward a well-balanced and diversified set of sustainable and predictable revenue sources.  In part, the 2010 reduced reliance on property taxes is attributed to increased fare and user fee revenues, growth in municipal land transfer tax revenues, and further upload of the costs for provincial social services.

Chart 4 in the report illustrates where the 2010 Net Operating Budget will be spent.  Consistent with the allocation of the gross expenditures, 73% of the 2010 Net Budget is directed to emergency services, cost shared / provincially mandated health and social services, and transit.

The Deputy City Manager and Chief Financial Officer recommends that:

1.         City Council again elect to raise the tax rates on the restricted property classes (commercial, industrial, and multi-residential) by one-third of the percentage tax rate increase on the unrestricted property classes (residential, new multi-residential, pipelines, farmlands, and managed forests) as adopted by Council as policy during consideration of the “Enhancing Toronto’s Business Climate” initiative in October 2005, and in accordance with Provincial Regulation.

2.         City Council adopt the 2010 tax ratios shown in Column II of the report (before budgetary levy increase) for each of the property classes set out below in Column I of the report, which together with the 2010 municipal budgetary tax levy increase as recommended in Recommendation 4(b), will result in the 2010 ending tax ratios shown in Column III of the report, which meet or exceed Council’s tax ratio reduction targets for 2010, shown in Column IV of the report, set out in the “Enhancing Toronto’s Business Climate” initiative adopted in October 2005.

3.         Council enact a by-law to establish two bands of assessment of property in the Residual Commercial property class, for the purposes of facilitating graduated tax rates for the Residual Commercial property class in 2010, and setting such bands of assessment for each band shown in Column II of the report at the amount shown in Column III of the report, and setting the ratio of the tax rates for each band in relation to each other at the ratio shown in Column IV of the report.

4.         Council adopt:

a.         the tax rates set out below in Column III of the report, which rates will raise a local municipal general tax levy for 2010 of $3,471,437,412; and,

b.         the tax rates set out below in Column IV of the report, which rates represent a 2.90% increase on the unrestricted property classes (residential, new multi-residential, pipelines, farmlands, and managed forests) and a 0.967% increase on the restricted property classes (commercial, industrial, and multi-residential) and which rates will raise an additional local municipal tax levy for 2010 of $63,039,664 to fund the 2010 operating budget tax levy increase, as determined in accordance with legislative requirements.

5.         An adjustment be made to the 2010 Non-Program Tax Account in the amount of $6,795,758 to fund the mandatory 2010 property tax rebates to registered charities in the commercial property class, which adjustment is to be funded, for a net impact on the 2010 operating budget of zero, by the following:

a.         The additional tax rates set out below in Column III of the report be levied as part of the general local municipal levy on the commercial classes set out in Column I of the report and Column II of the report to raise a further additional local municipal tax levy of $6,795,758 to fund the total estimated rebates to registered charities for properties in the commercial classes in 2010.

6.         With respect to the Capping and Clawback of taxes in the commercial, industrial and multi-residential property classes:

a.                Council enact the necessary by-law to continue to limit reassessment-related tax increases for the commercial, industrial, and multi-residential property classes, such a cap limit to be based on 5% of the preceding year’s current value taxes, for the 2010 taxation year.

b.                Council enact a by-law to continue to provide for the removal of properties from the capping and clawback system once they have reached their full CVA-level of taxation for the 2010 tax year.

7.                The Deputy City Manager and Chief Financial Officer be directed to report directly to Council at its meeting scheduled for April 15 and 16, 2010, on the 2010 tax rates for school purposes, and the 2010 percentage of the tax decreases required to recover the revenues foregone as a result of the cap limit on properties in the commercial, industrial and multi-residential property classes (the 2010 ‘clawback’ rates).

8.         Council again enact a by-law to maintain the phase-out of the comparable property tax treatment for new construction in the commercial, industrial and multi-residential classes by maintaining the minimum property taxes for new construction at 100% of the full uncapped CVA level of taxes for 2010 and future years

9.                 As in past years, the instalment dates for the 2010 final tax bills be set as follows:

a.         The regular instalment dates be the first business days of July, August and September.

b.         For taxpayers who are enrolled in the monthly pre-authorized property tax payment program, the instalment dates be the 15^th, or first business day thereafter, of each of the months of July to December.

c.         For taxpayers who are enrolled in the two installment program, the final instalment date be July 2.

10.

a.         The collection of taxes for 2010, other than those levied under By-law No. 1226-2009 (the interim levy by-law) be authorized, and,

b.         A penalty charge for non-payment of taxes of 1.25 percent of taxes due and unpaid be added on the first day of default, and interest be charged at a rate of 1.25 percent per month on all outstanding taxes accruing from the first day of default.

11.       The appropriate officials be authorized to take the necessary action to give effect thereto and authority be granted for the introduction of the necessary bills in Council.