Building a sustainable, affordable and well-managed city
The City of Toronto's many services keep our homes and neighbourhoods safe and vibrant, encourage business growth and investments, and make Toronto welcoming for visitors from around the world. Garbage collection, public libraries, road repair, TTC, recreation programs, childcare, water testing, police, fire and emergency medical response are all examples of municipal services the City provides every day. In 2013, the total cost to deliver these services to Toronto residents was $10.858 billion.
What is the budget?
The City's budget is a financial plan that describes how much money the City will raise and spend within a year. It is the blueprint that aligns the City's priorities with the services we deliver to residents and makes decisions on what the City infrastructure will be purchased, built and repaired.
Each year in the fall, City staff put forward a recommended budget and then the Mayor and City Council − with input from Toronto residents and businesses − make decisions about the City's services and programs and approve the City's final budget early in the new year.
Operating vs Capital – what's the difference?
The operating budget covers day-to-day spending on services such as recreational programs, parks maintenance, beaches and city roads, garbage collection, delivery of safe drinking water, police and other emergency services. Approximately 39% of the funds for the operating budget come from property tax. The remainder comes from provincial grants and subsidies, and user fees.
The capital budget sets aside future funding for the construction and repair of transit, roads, bridges, public buildings such as libraries, community centres and fire stations, water and sewer facilities, parks and other major infrastructure projects. The City of Toronto updates and presents a new 10-year Capital Budget and Plan each year as part of the annual budget process. The capital budget is primarily funded by property taxes. Other funds come from reserves, development charges, other levels of government and by borrowing funds or taking on debt.
Rate supported programs
The City also has three rate supported programs: Toronto Water, Solid Waste Management Services and Toronto Parking Authority. These programs are funded entirely by the user in the form of fees. For example, your water and garbage costs are calculated by how much water you use and the size of your garbage bin. In turn, the revenue collected from these user fees is used to pay for the services that are provided.
The costs of several of the City's services are shared between the City and other levels of government. For example shelters, daycare, emergency services, and income support programs are funded by both the City and the Province of Ontario.
Explaining the difference between 'gross' and 'net' costs
The gross is the total cost to deliver programs and services. This expenditure is offset by funding and subsidies for cost-shared services as well as fees and charges for programs and services. The difference between gross expenditure and these incomes is the net budget, which is the amount of the operating budget that is paid for by your property taxes.
Budget surpluses and deficits
A surplus occurs when the City either spends less than it thought it would, or raises more revenue than predicted. The City has a policy to use any operating budget surpluses to fund infrastructure projects in the capital budget.
A deficit would occur if the City's expenses were greater than their revenues, or if the City collected less revenue than it anticipated. The City has never had, nor is permitted to have, a year-end operating budget deficit.
Balancing the budget
The City is required by provincial law to balance its operating and capital budgets each year – which means that the money spent must be equal to the money raised. To balance the budget, the City can either increase its revenues using tools such as property taxes and fees, or through managing expenses by changing or reducing services.
For more information on the City Budget and how you can get involved, visit toronto.ca/budget2014.