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Property Tax Hike: What Is Toronto’s Way Forward?

What Kind Of Property Tax Hike Will Toronto See? Here’s what we know about the budget being launched Monday
While the property tax increase in Mayor Olivia Chow’s second budget will likely be less than the record hike in 2024, her allies warn there will likely only be enough money in 2025 for “targeted” service improvements.
Crafting this year’s budget will be a delicate balancing act for Mayor Olivia Chow, who was elected on a pledge to improve day-to-day services, but who is also facing pressure to control spending and ease residents’ tax burden.
The property tax hike in this year’s city budget will likely be less painful for Torontonians than the historic increase Mayor Olivia Chow imposed in 2024.
But while the spending plan set to launch this week is expected to include more money for transit, libraries, emergency services and housing, allies of the mayor warned there won’t be across-the-board improvements to many services residents depend on as Toronto still faces serious financial challenges.
Crafting the annual spending plan will be a delicate balancing act for Chow, who was elected on a pledge to improve day-to-day services, but who is also facing pressure to control spending and ease residents’ tax burden.
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She will have to find ways to pay for increasingly expensive essential services while making up an opening operating shortfall that has been estimated at more than a billion dollars.

Toronto Mayor, Olivia Chow
“It’s going to be a tough year,” said Chris Moise (Ward 13, Toronto Centre), who sits on the budget committee. He warned the cost of recent labour settlements and uncertainty over a potential change in the federal government will make the process even harder.
The mayor and city staff will launch the budget Monday, kicking off weeks of consultations and committee meetings. Under the strong-mayor system imposed by the province, Chow is required to formally propose her version of the spending plan by Feb. 1. It will go to council on Feb. 11.
Spending on the rise
The 2024 budget — Chow’s first after being elected — was funded through a 9.5 per cent property tax increase, the largest one-year hike in post-amalgamation Toronto. Moise predicted this year’s property tax hike won’t be a repeat of that eye-watering raise this time.
“It won’t be as much as last year,” said Moise. “I think the city is doing the best it can, the mayor and council are doing the best they can, to keep taxes at a minimum this year.”
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That won’t be easy. Even before full details of the budget are public, it’s clear city spending — and the taxes residents pay for them — are set to rise, with the operating budget expected to exceed $17 billion.
As a starting point, in 2023 council endorsed annual property tax increases of 1.5 per cent every year until 2035 for the “city building fund,” which raises money for capital projects such as transit and housing.
Then there’s the 2025 opening budget pressure — the inflation- and growth-related costs required just to maintain existing service levels — which last fall the city estimated at $1.2 billion.
By law, the city can’t run a deficit. It also gets the smallest share of taxpayer dollars compared to higher levels of government — for every one dollar collected, 10 cents flow to local government — and each year the city scrambles to fill the opening gap through a mixture of tax increases, internal savings, assistance from other levels of government and other strategies.
In addition to bridging the shortfall, the mayor and council will have to account for new spending already built into the budget.
That includes new contracts for city workers, such as the agreement reached with transit employees last June to avoid a TTC strike that will require about $55 million this year.
Settlements for police, firefighters and the city workers’ two main unions are either still being worked out or have yet to be announced, and are also expected to increase costs.
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There’s also new spending on city programs Chow has identified as priorities, including an additional $46.2 million for the Toronto Police Service to hire more officers, and $85 million for TTC operating costs that will go toward freezing fares and additional transit service.
Chow has also promised $2 million to expand library hours, $3.9 million to enrol more children in student nutrition programs and $3 million to deploy more traffic agents.
“Mayor Chow is clear, we want to invest in the services that the people of Toronto rely on,” her spokesperson Bradley Hammond said in an email, adding that includes “looking for efficiencies and savings to return best value for the people of Toronto.”
Culled from Toronto Star