02/12/2015 05:18 EST | Updated 04/14/2015 05:59 EDT

John Tory unveils plan to bridge $86M budget shortfall

Mayor John Tory is standing behind a plan that would see Toronto borrow money from its reserves and make $25 million in cuts to this year's budget to bridge a sizeable funding gap.

"When I took office, we were confronted with an $86-million shortfall for this year's city budget," Tory said Thursday, referring to funding known as the Toronto Pooling Compensation that the province is in the midst of phasing out.

"If that shortfall were imposed all at once, it would severely limit our ability to invest in key services, like the TTC, while keeping taxes affordable for Toronto families, especially those that are struggling."

The $86-million hole in the budget is a result of decreased provincial funding.

While the Ontario government had offered the city a line of credit to deal with the change in funding, Tory said last month that Toronto would go its own way. On Thursday, he explained what that will mean for the city government.

"We said we would take care of our own house and we’re here today to spell out how we plan to do just that," Tory said Thursday.

Tory said the city manager and the chief financial officer will present a plan to the budget committee on Friday, which includes both immediate budget adjustments and borrowing from the city reserves for a period of several years.

The mayor outlined some examples of the types of adjustments that are being proposed for this year's budget.

Tory said there is a proposal for the city to eliminate five positions in transportation services that have stood vacant for several years.

"Let's be frank, if we haven’t needed those positions to be filled by now, I think it's safe to say no one will miss them," Tory said.

A second example Tory gave was the reduction of the budget for social services, given that they are dealing with lower caseload volumes than in the past.

Tory said the TTC and the police will each be asked to find $5 million in savings from their budgets.

'Not rhetoric or a meat cleaver'

Under the proposed plan, Tory said the city would "temporarily" reduce capital contributions from the operating budget to the tune of $130 million over a three-year period. However, the city would then borrow money from its reserves to cover this temporary drop in capital funding.

As these changes take place, Tory said the city will make adjustments to its budget to deal with the decrease in provincial funding. The mayor said this will happen over a four-year period.

"I also want to emphasize this proposal is designed to have no impact on service levels," said Tory. "I want to be clear as well, this is the beginning of a process where we will be scouring the city for real savings and efficiencies."

The mayor said he’ll be outlining the framework of a plan for all city divisions and agencies to achieve a savings target of two per cent. This could help the city save $80 million by the end of this year, though Tory said most of the changes would come in next year's budget.

Tory was adamant that the strategy was the best for the city to pursue.

"Building the city, building the transit, getting the housing fixed, putting the support systems in place that our people need in a financially responsible way requires not rhetoric or a meat cleaver, but competence, common sense and discipline," he said.

"This budget is a creative solution that is both responsible and practical and reflects what fresh eyes can bring to many of the city’s challenges," Tory added.