Make Toronto A Province

Large cities are so different from low-density communities that they need the independence of a province.

Toronto is approaching an important election on Oct. 25, 2010. Most of the leading candidates are promising to fix Toronto’s problems through good management, keeping spending down, and cutting costs.

But none of these methods will fix Toronto’s problems. That’s not to say there are no savings, but even with them, Toronto will continue to operate well below its potential and its financing problems will continue.

What would really help Toronto would be to separate it from Ontario and make it a province. Large cities like Toronto and Montreal suffer in Canada because of the lack of recognition by the Constitution whereby cities are regarded as “creatures of the province." The reality is that large cities are so different from low-density towns or cities that they need the independence only a province has, at least in Canada.

Let’s compare Toronto to York Region, for example, which is an agglomeration of small cities with no central one. According to the 2008 Financial Information Returns from Toronto and York, in the last 25 years, Toronto has added mostly condominiums, while York has almost exclusively built single-family detached houses. The result is that York has more than twice as many detached homes as Toronto in proportion to its population.

Market value assessment makes this difference important because detached homes have a much higher value than other types, but most are occupied by families. Single-family homes in Toronto also have much higher property values relative to those in York or the rest of Ontario.

The high proportion of detached homes in York means that it collects a lot more tax per capita from the residential class (which includes condominiums and duplexes up to sixplexes) than Toronto does.

Toronto’s revenue problem is compounded by the fact that the tax paid for city uses per unit in the multi-res (mainly high-rise apartments) class is about 80 per cent that of the detached house. Since Toronto has far more multi-res apartments than York, this reduces the tax revenue per person for city purposes.

The provincial education tax adds to the problem, but that’s for another day.

When it comes to spending, there is much discussion about the low tax rate for Toronto. This is as it should be because cities are more efficient than sprawling towns. An analysis of spending by the two municipalities reveals that the total spent for “municipal services,” leaving out provincially mandated services such as social housing and social and family services, is not much different overall.

But there are significant differences in some areas. The sprawl of York Region requires much more money per person for roadways, winter control, sewers, and waterworks. On the other hand, Toronto spends more on police, fire, libraries, parks, and recreation – as it should, being a central city with a large population of low-income households.

People, not buildings, are what Toronto spends money on. The same number of people living in a single-family dwelling will cost the city approximately the same as in a condo, sixplex, townhome, or apartment.

Without a major change to the way we raise money for municipal services, it will be difficult to get more money from property taxes. The problems for businesses in the city are well known and quite real. Saving business by loading tax onto residential properties will mean large tax increases for the single-family home in Toronto. The probable result will be a steady exodus of the middle class from the city and a long-term decline in the value of city property.

Most of Toronto’s high costs are for welfare services that should be paid from upper level governments using taxes that are paid by everyone and income related. The province controls that and keeps delaying the necessary uploading of these costs because it would have to increase taxes on the rest of the province.

If Toronto were made a province, we could control who pays what, and Toronto could finally start to realize its potential.