Don Drummond

1
A NEW DEAL FOR CITIESDoes Our Financial
Capacity Meet Our Needs?
Presentation by

• Don Drummond
• Senior Vice President Chief Economist
• TD Bank Financial Group

2
Challenges For Toronto

• Sustain the economic growth of the GTA region
• Address the shift of people, jobs and businesses
  from City of Toronto
• Address infrastructure shortcomings
• public transit
• water sewage
• social housing
• roads and bridges
• Address growing debt of Toronto

3
Challenges For Toronto

• TTC capital funding alone is immense
• City also faces massive capital needs for
• GO Transit
• Social Housing
• Water Sewer Systems
• Waterfront Development

4
(No Transcript)
5
Torontos Debt Burden Is Growing
6
Toronto Heavily Dependent on Property Taxes
7
Toronto Heavily Dependent on Property Taxes
8
Property Tax Assessment Declining in Toronto
9
Property Tax System Pushed to the Limit

• Not tightly related to ability to pay or services
  received
• Commercial/Industrial much higher than rest of
  GTA
• Second highest commercial rates in North America

10
Not Everything from "U.S. Model is Worth
Imitating

• Lots of beggar thy neighbour incentives
• Tax free municipal bonds are inefficient,
  inequitable provincial and federal grants
• Grants from other levels of government preserve
  the position of subserviance and are not
  dependable

11
Cities Need Greater Access to Sources of Funds

• More dependable than grants
• Improves accountability

12
Where Do We Go From Here? Cities Form Part Of The
Solution

• Press on with savings from amalgamation
• Alternative service delivery (ASD)
• Establish governance arrangements to realize
  economies of scale
• Address inequities - property tax system
• Limit urban sprawl
• Additional use of user fees where appropriate
• Auditor General

13
Provincial And Federal Governments Have A Role
Federal and Provincial Governments

• Focus future tax cuts on personal and capital
  sides
• Re-orient spending to emphasize investment in
  knowledge
• Increase grants in near-term
• multi-year plan
• Revisit whether Toronto can fulfill its
  obligation on social housing waterfront
• Lower federal and provincial excise tax on
  gasoline allow municipalities to use room
• Fully exempt municipalities from both PST GST

14
Specific Needs To Be Filled By Federal Government
Federal Government

• Allocate most of the 600 million border
  infrastructure program to Ontario
• Use an external advisory board for infrastructure
  decisions
• Realign immigration settlement funds

15
Specific Needs To Be Filled By Federal Government
Provincial Government

• Continue to grant cities more flexibility
• Give cities authority to broaden revenue sources
• excise taxes and vehicle registration fees
• Free up provincial tax room

16
Private Sector Must Get Involved
Private Sector

• Must take greater interest
• Draw on its financial resources and strategic
  expertise
• Create opportunities to earn commercial rates of
  return
• TD Forum on Standard of Living to encourage
  participation of the private sector