Making Life More Affordable: Highlights from Toronto's Approved Budget
- 11 hours ago
- 3 min read
It’s a wrap on another City budget year. On Tuesday, Council approved Toronto’s 2026 Budget, a plan focused on making life more affordable for working families while continuing to invest in the services and infrastructure our growing city depends on.
This budget is about doing the basics well, protecting the services people rely on, being disciplined with spending and making smart investments in safety and state-of-good-repair. It helps residents manage affordability pressures while keeping Toronto on a stable, sustainable path.
This year’s residential property tax increase is a combined 2.2% (0.7% Property Tax increase, 1.5% City Building Fund levy increase). That rate is more in line with inflation than we have seen in recent years and reflects the progress we’ve made to stabilize the City’s finances after the enormous pressures left by the pandemic. As our Chief Financial Officer and I committed to doing, we are returning to a more predictable and affordable path forward.
Finding efficiencies and protecting taxpayers
City staff left no stone unturned to make this budget as affordable as possible. This year’s budget includes $788 million in reductions and offsets — $108 million more than last year.
Here’s the breakdown:
$57 million in efficiencies – permanent savings built into operations
$78 million from line-by-line reviews – aligning spending to actuals
$264 million from program reviews – including the ongoing non-essential hiring freeze
$286 million from revenue adjustments – such as increases in the luxury homes tax
$30 million from bringing the Toronto Parking Authority in-house
At the same time, projected opening budget pressures continue to decline, a strong sign that Toronto’s financial position is stabilizing.
Thanks to these measures, Toronto is now on stronger financial footing, earning a AA+ credit rating for the first time in 23 years.
Supporting Toronto's small businesses and local economy
Small businesses are Toronto’s number one employer, and I was proud to move the motion to increase the Small Business Tax Discount from 15% to 20%. This meaningful investment supports main street businesses at a time when many are navigating uncertainty from U.S. tariffs and broader global economic pressures.
The truth about reserves
Some commentary during this year’s budget debate focused on reserve funds. City Hall runs on reserve fund accounting. Every division has its reserve and reserve fund. Moneys are contributed to all of them each year and when those monies’ intended purpose arrives, monies flow out. This year a large amount is flowing out thanks to things like FIFA, the cost of the City Clerk administering upcoming municipal election, money from the Province as part of the New Deal, and a busy capital works season, but it is the result of prudent management.
Years ago, on a trip to Disney World, I told my daughters, “Don’t ask me every single day for a toy. We have $250 a day and every time we don’t spend it all, the money will go to our last day. On our last day we will use up all the rest at the Disney Store.” At City Hall we are not buying toys, but the principle around one-time costs is the same.
At the TTC, for instance, there is significant pressure this year as we begin operating Lines 5 and 6. Thankfully, a large portion of previously allocated New Deal funding remains available in reserve to help balance the TTC operating budget, exactly as planned when the agreement was signed. The Provincial government is already in discussions with City Hall about a potential New Deal Part Two for 2027.
So overall, while reserve draws are higher this year at $1.7 billion, most of those funds will support an extremely busy capital program focused on significant repairs and investments across the city. Of that total, $464 million will support operating pressures — for the exact purposes the funds were originally reserved. By the end of 2026, Toronto will still hold approximately $10 billion in reserve accounts, earning interest until those dollars are needed.
Looking ahead
These remain uncertain economic times. Families are feeling pressure, and cities must balance affordability with the real costs of delivering life-saving programs and maintaining critical infrastructure. This budget meets that challenge — investing in people today while planning responsibly for tomorrow.
Thank you to everyone who shared feedback throughout the budget process. Your voices shape the decisions we make at City Hall, and I remain committed to listening and advocating for Don Valley North and all Toronto residents.
