Following the 2023 Budget Process, the City, with the support of an independent third-party, updated its financial model to assess the long-term fiscal risks anticipated in the next 10 years. This updated analysis was presented to City Council in March 2023 and indicated that the City faces a combined operating and capital pressure of $46.5 billion over 10 years, a pressure which has been created over decades. The analysis represented the City's first 10-year consolidated operating and capital financial model. The purpose of this report is to provide an updated Long-Term Financial Plan (LTFP) which identifies and considers immediate and long-term opportunities to address the City's fiscal challenges, including options to review operating expenditures, financial incentives, new and existing revenue tools, capital prioritization, asset transactions, and intergovernmental funding arrangements. From the opportunities identified in Attachment 1, staff have assessed these and are recommending implementation or further exploration of a subset of options, some of which are expected to realize financial benefits as early as 2024. However, it's important to highlight that these actions alone will not be sufficient to address the City's fiscal risks in 2024 or over the next 10 years. It will require continued collaborative efforts with City Council and other orders of government to promote the long-term financial sustainability of the City, and to ensure the City continues to generate financial benefits for the Province and for Canada. Further, it's critical to note that, given the urgency of the financial challenges ahead, inaction is not an option at this time to address the City's financial sustainability and urgent 2024 financial needs. As the economic engine of Canada, the City of Toronto currently delivers services, initiatives and projects that far exceed the traditional role of municipal government, and which substantially benefit the region and other orders of government. In addition, the City is faced with growing demands for services and infrastructure, for which the City is not able to capture the benefits of growth. This is unlike the provincial and federal governments whose funding tools are indexed with the growth of the economy, such as income and sales taxes. Rather, the City is unable to keep up with the costs of delivering both the upfront infrastructure requirements associated with growth, or the ongoing and sustained demand for services. While the City has limited revenue tools and strategies available under the City of Toronto Act (COTA), the LTFP makes every effort to address the City's financial challenges on its own. However, ultimately, the City's existing revenues do not match the complexity or the level of expenditures incurred. As will be demonstrated in this report, without a new fiscal framework for municipalities or sustained long-term funding support commensurate with City responsibilities, the City will have no choice but to further consider reduction of service levels and cancellation of capital projects. Pending Council's consideration and direction, staff will initiate additional review, analysis and implementation plans of identified options, and report back as indicated below. The LTFP can be leveraged to guide future decision-making by Council with a focus on long-term planning and financial sustainability.
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