He will look elsewhere to balance the budget, he said.
Tory said he looked at the offer and decided its terms were unfavourable to the city. The line of credit included interest rates decided by market rates and using city property as a security.
"We concluded the the city can do better on its own," said the mayor during a budget update at city hall.
Coun. Denzil Minnan-Wong, Tory's deputy mayor, was less polite in declining the line of credit. "At the end of the day we decided, you know what, ‘Thanks for nothing,’" he said.
Tory initially said he would take Ontario’s offer of a $200 million line of credit to balance the budget. His reversal means the budget shortfall needs to be covered by other means, but Tory did not elaborate on what those were on Thursday.
He ruled out any tax increases above the rate of inflation, however.
Tory has proposed keeping a 2.75 per cent property tax increase, reinstating bus routes that were previously cut, adding new shelter beds and more paramedics. He also wants children to ride the TTC for free.
Tory did muse at the news conference about deferring some capital projects if need be to fund the initiatives, but he did not say which projects.
Refusing the line of credit raised questions about the mayor's relationship with the provincial government. Tory campaigned on a promise to work with Premier Kathleen Wynne in ways his predecessor, Rob Ford, did not. On Thursday, Tory reaffirmed he would continue to work with Wynne, and also added that Ford made "no effort" to work with her at all.
Charles Sousa, Ontario's finance minister, said weeks of negotiation went into the line of credit offer.
"We understand the city has decided to seek financing through other means," Sousa said. "We respect that decision."