Freeland Rejects Toronto’s Bailout Request, Points At Ontario Instead

Deputy Prime Minister Chrystia Freeland has declined Toronto’s appeal for a bailout to address the city’s financial challenges, asserting that the Ontario government is well-positioned to offer assistance.

In a letter addressed to Toronto Mayor Olivia Chow on Monday, Freeland, who also serves as the federal finance minister, highlighted the substantial support Ottawa has already provided to Toronto, totaling $6.14 billion over the past eight years. This support, which included significant investments during the COVID-19 pandemic, has played a crucial role in bolstering the province’s finances.

“However, the ability of the federal government to spend is not infinite – and the emergency support we provided during the pandemic led directly to the excellent fiscal position that the Province of Ontario currently enjoys,” Freeland said.

She cited the provincial government’s projected surplus of $4.4 billion by 2025-26 in its recent budget. Additionally, the federal government went above and beyond regular transfers, providing over $10.2 billion in extra support during the pandemic.

In light of Toronto’s budgetary requirements, Freeland reiterated her message to previous city officials, stating that the constitutional responsibility and fiscal capacity to support Toronto rests with the Province of Ontario.

“I must reiterate a message that I conveyed directly to then-Mayor (John) Tory and Deputy Mayor (Jennifer) McKelvie: the Province of Ontario has both the constitutional responsibility and the fiscal capacity to support Toronto. It is our firm expectation that they will do so,” she added.

Furthermore, Freeland pointed out Toronto’s substantial financial reserves, indicating that as of September 2022, the city’s total reserves and reserve funds held a balance of $11.2 billion—an increase of $2.2 billion from the previous year. Additionally, there are at least $1.6 billion available in uncommitted “stabilization” funds. However, the city has already planned to utilize most of these reserves if other levels of government fail to provide assistance.

Toronto is currently projecting a budget shortfall of over $900 million this year, and most of the remaining backstop funds would be used if funding from the province or Ottawa is not granted. The city’s operating budget was balanced with the expectation of receiving a total of $932.8 million from both levels of government.

In response to pressure from the city and refugee advocacy groups, Ottawa announced last week that it will provide $97 million to fund shelter spaces for asylum seekers currently without accommodation. However, Toronto has emphasized that it requires more funding to meet the increasing demand, particularly with an additional $157 million needed to cover expenses for 3,100 beds specifically designated for refugee claimants and for providing shelter to those currently on the streets.

Last week, Ontario Premier Doug Ford and Mayor Chow announced their commitment of $6.67 million each to expand a rent supplement program for those experiencing homelessness, with the provincial government matching the contribution. They also requested Ottawa’s support of $26.7 million to further expand the rent supplement program.

While the $97 million announced by Ottawa is seen as a positive step for short-term relief, Chow has stressed that a long-term solution is essential, along with additional funding to cover expenses already incurred by the city.

Chow’s recent mayoral win is still facing a challenge from candidate Xiao Hua Gong, who is demanding a recount and questioning the accuracy of the results despite receiving only 0.4% support in the official byelection.

Information for this story was found via The Globe And Mail and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.