The choices Torontonians make in the municipal election will shape how our city grows over the next few years. To help voters understand what is at stake, the Toronto Region Board of Trade is publishing a series of three non-partisan issue guides breaking down some of the city’s most complex economic challenges. Each guide explains the problem, why it matters and the actions the next mayor and council should consider.
Toronto is responsible for delivering more and more essential services for residents, but it does not have the funding needed to pay for them.
What Is a Municipal Fiscal Framework?
A municipal fiscal framework is simply the city’s financial rulebook.
It determines:
- What services the City is responsible for providing
- Where the money to pay for those services comes from
- How costs are shared between the different levels of government
Right now, Toronto relies heavily on property taxes, transit fares and user fees. Unlike income taxes and sales taxes, these revenues do not automatically grow when the economy grows.
At the same time, Toronto pays for expensive services connected to provincial and federal responsibilities, like public housing, shelters, social services, long-term care and major transit infrastructure.
The result is a financial system that is out of balance: Toronto has big-city responsibilities but a limited set of local revenue tools.
BY THE NUMBERS
$18.9 billion
Toronto’s 2026 operating budget - the money used to run services such as transit, policing, shelters, recreation and emergency response.
$1.35 billion
The budget gap Toronto faced at the beginning of the 2026 budget process. Covering the entire gap through property taxes alone would have required an estimated 27% property tax increase on residents.
$1.6 billion each year
The approximate amount of property tax revenue used to fund services connected to provincial and federal responsibilities, including housing, social services and health programs. That is about 27% of all property tax revenue collected.
$63.1 billion
The value of Toronto’s 10-year plan for major construction, infrastructure and repairs. Only 13% is expected to come from federal and provincial governments.
Here’s What’s at Stake
When the cost of services like transit, policing, shelters or public housing increase without support from other governments, the City has less money available to invest in things that make our city a desirable place to live and grow: That can mean delaying or scaling back:
- Repairs to your parks, playgrounds and community centres.
- Library improvements and community programming.
- Road repairs and pothole maintenance.
- TTC maintenance and service improvements.
- New affordable housing and repairs to existing public housing.
- Cultural facilities and improvements to public spaces.
It also leaves the City with difficult choices: do we raise property taxes and fees, reduce or delay services, borrow more money, or allow important infrastructure to fall further into disrepair?