How months of calls to ease Toronto's financial woes led to some provincial and federal help

Toronto will receive close to half a billion dollars in federal funding to build new housing, Prime Minister Justin Trudeau's office announced Thursday.

The money is being earmarked to build about 12,000 housing units in the next three years and around 53,000 units in the next decade.

But the funding falls short of what Mayor Olivia Chow has been calling on the federal government to provide for months, that is for more than housing.

The city has asked for $2.7 billion stemming from the new deal it made with the province at the end of November that saw Ontario promising $1 billion, which will go toward helping build new transit projects, creating more shelters and homeless supports for non-refugees, and funding to exceed annual housing targets for the next three years.

The new deal with Ontario also specifically calls on the federal government for further help, as much of the province's promises are contingent on Ottawa also taking a seat at the table.

When the deal was announced, both Chow and Premier Doug Ford called on the Trudeau government to increase funding, which was an echo of calls they had already made over the months prior.

"So, you've heard this before, and you're going to hear it again," Chow said in early December.

"We are needing the federal government to step up. If the federal government doesn't step up, we are still in trouble."

Here's an overview of what Chow has said about Toronto's financial situation, how it got to this point and what experts have told CBC Toronto about the asks.

Why is Toronto in a financial crisis?

Toronto heading into a financial crisis has been a discussion point since the beginning of the year. Former mayor John Tory requested in February that staff look into new tools to generate revenue because the city faces a $1.5 billion budget shortfall for 2023 and 2024 in the wake of the pandemic.

The pandemic caused public health costs to skyrocket while revenue generated, including from TTC fares, collapsed.

Prior to Chow becoming mayor, former Deputy Mayor Jennifer McKelvie said in March that whoever became the city's next mayor would have to oversee service cuts if other levels of government couldn't help cover the budget shortfall.

"While the federal government wants to focus on growth, they can't leave municipalities that are very much in the state of recovery behind," McKelvie said at city hall at the time.

McKelvie argued that Toronto's services — including shelter and transit — support people from across the GTA and deserve more funding from other levels of government.

She said dipping into reserve funds is a poor financial strategy. "We know the way we're running the city right now is not sustainable," said McKelvie.

What funding has Toronto asked for?

When Chow won the mayoral byelection in June, she asked city staff that the report on new tools be expedited.

According to the report published in August, $1.1 billion of Toronto's annual property tax revenue is spent on "extensions of federal and provincial responsibilities."

She started ramping up calls for funding in August, as the city was under continued pressure due to homelessness stemming from the affordability crisis and an influx of asylum seekers who could not find shelter space.

The response to refugees along with transit expansion should be responsibilities of the province and federal governments, Chow argued at the time.

"To build a city we deserve, after years of debate, we need to face facts. Including the fact that time and time again the city has been asked to step up and fund things that are a responsibility of other levels of government," she said.

How have the province and federal government responded?

By summer 2023, Ontario and the federal government had repeatedly declined previous requests from Toronto to address its budget hole.

"We are working with Toronto on the third-party review of their finances to ensure taxpayers receive maximum value for money and the best possible service," spokesperson Caitlin Clark for Premier Ford's office said in an email to CBC Toronto in August.

Premier Doug Ford and Toronto Mayor Olivia Chow hold a joint press conference at Queen’s Park on Nov. 27 to announce their new deal. (Evan Mitsui/CBC)

And by September, Ford conceded that Toronto's finances are not sustainable. For years he had repeated the same message — that the city's financial woes are due to mismanagement by council.

Instead he changed his tone and said the province would work with the city to address the $1.5 billion shortfall. That led to the new deal with Toronto with the promise of $1 billion in funding if the federal government also steps up to the plate.

The federal government told the city in November that it will need to change its building policies in order to gain access to the half a billion in funding for housing coming out of Ottawa's Housing Accelerator Fund.

City councillors voted last week in favour of approving changes so that Toronto's application for the money would be accepted. This also included the city committing to put affordable housing units near public transit.

The $471 million from the federal government was announced by Trudeau on Thursday.

Chow said she was pleased with the funding.

"It's a time for a new beginning, for transformation. And we have gathered here to announce a hopeful new beginning," she said.

Experts previously told CBC Toronto that the new deal between the city and the province may not be enough to persuade Ottawa to provide the $2.7 billion in total.

"Justin Trudeau has a much larger political geography to walk through and he has a wider spectrum of problems," said York University public policy professor Zac Spicer earlier this month.

"Spending money on Toronto is probably not going to get him the votes that he needs elsewhere."