Listen to this article
Estimated 5 minutes
The audio version of this article is generated by AI-based technology. Mispronunciations can occur. We are working with our partners to continually review and improve the results.
The City of Toronto’s 2026 budget will prioritize affordability and will include a lower tax increase than the city has seen in recent years, Mayor Olivia Chow said ahead of the budget’s reveal Thursday morning.
Property taxes in Toronto are set to increase at 2.2 per cent, Chow said in a statement on Wednesday.
The budget was made to improve affordability for residents, she said at a news conference on Thursday before the budget committee meeting.
“If you work here, you should be able to afford to live here,” Chow told reporters on Thursday.
The total tax increase includes a 0.7 per cent bump to the residential property tax and a 1.5 per cent increase to the city building levy. Cost of living issues — specifically the price of renting or owning a home — have been front and centre at city hall in recent years and will likely play a major role in October’s municipal election.
Chow said the budget will also outline funding for school meal programs, a TTC fare freeze and fare capping at 47 rides a month.
“We make the budget more fair by shifting the burden from families like yours to speculators and luxury property buyers,” Chow said, citing the increase to the municipal land transfer tax (MLTT) on houses valued at more than $3 million, which council voted in last month.
Food bank use in Toronto is at an all-time high, once again. That’s according to the annual ‘Who’s Hungry’ report from the Daily Bread and North York Harvest food banks. The report found a 36 per cent increase over last year, in terms of the number of Torontonians accessing food banks, and industry leaders say they’re tired of their calls for help going unanswered. Tyler Cheese has more.
The annual budget of $18.9 billion will also go towards increasing transit and emergency services. Chow said it will allow the city to hire more first responders and will allow libraries to open seven days a week.
City’s finances ‘on track,’ says budget chief
The budget also includes a five per cent tax cut for small businesses in the city, according to the city’s budget chief and councillor for Don Valley North, Shelley Carroll.
She said the city is saving money by having each department work to reduce its spending and increase efficiency.
“This is not a one-year decision” Carroll said at the news conference. “It’s part of an intentional planned reduction as part of our multi-year strategy to get Toronto’s finances back on track.”
Torontonians saw a 6.9 per cent increase to property taxes last year and a 9.5 per cent increase in 2024.
When Chow took office in 2023, there was a $1.8 billion deficit in the city’s operating budget.
Chow said after years of higher taxes to reduce the hole in the city’s budget, the city’s finances have stabilized.
Toronto mayor Olivia Chow sat down with CBC’s Lane Harrison to discuss what her goals are for the city for 2026.
The shortfall has been reduced to $1 billion, Carroll said on Thursday. And the municipal government’s credit rating has increased for the first time in 23 years to AA+, according to a release from Chow’s office.
It’s the last year the city’s new deal with the province, which brought the city $1.23 billion in operating support, will be included in the budget, but Chow said negotiations to renew the deal with Ontario Premier Doug Ford are underway.
Opposition concerned about reserve spending
Coun. Brad Bradford, who has said he will run for mayor in this year’s election after losing his previous mayoral run to Chow, raised concerns about the budget relying on the city’s reserve funds to make up for the lower tax increase.
“My concern this morning is that Mayor Chow is mortgaging Toronto’s future to pay for her re-election prospects in the fall,” Bradford told reporters at city hall on Thursday.
Reserve funds are set to be paying for nine percent, $1.7 billion, of the city’s operating budget this year, according to the budget launch outline. That’s up from just under seven per cent of last year’s budget, $1.3 billion, being taken from reserves.
This year’s budget outline projects a $1.1 billion shortfall going into 2027.
Chow has not yet announced whether she will be running for re-election this year.
The money coming from reserves was saved for the purpose of spending it when needed, Carroll said on Thursday when asked about the use of the funds.
“We’re not taking any meaningfully different approach to reserves this year than we have in any other of the last five years,” Carroll said.
Over the next 10 years, the city’s planned spending of its reserves exceeds the fund’s projected balances by over $32 billion, according to the 2026 budget outline.
Coun. Lily Cheng also raised concerns about the city’s reliance on reserve funds in the budget commitee meeting and asked if there is a long-term plan to address the city’s lasting deficit.
City manager Paul Johnson said Toronto is working with the province on finding possible solutions.
“There are many routes to get there,” Johnson said in the meeting. “The bottom line is, in 2026, we need to get there.”
Bradford also raised concerns about the decrease in TTC ridership affecting funding sources.
The city’s budget outline estimates transit fares will cover six per cent of the operating funding.
“I’m going to be going through [the budget] line by line with a fine tooth comb and looking at where the money is coming from,” Bradford said.