Borrowing climbs, as does the cost of paying it back
« The debt is spiralling out of control .»
The megacity is another year older and deeper in debt.
In the 10 years since the amalgamated Toronto was formed, net debt has risen from less than $1 billion in 1998 to $2.4 billion in 2007.
"The debt is spiralling out of control," Councillor Doug Holyday told reporters yesterday as city council voted 34-10 in favour of next year’s proposed capital budget, which is expected to push the debt level to $2.6 billion in 2008.
As borrowing escalates, so does the cost of paying it back. Interest and principal payments are expected to rise by $40 million to $443 million in 2008, making debt repayment the second biggest expense in the operating budget after the police department.
Just under half the $1.6 billion in capital spending proposed for 2008 goes to the transit system to buy new buses, streetcars and subway cars, as well as new signals to make the Yonge subway line run better.
The second-largest item is for roads, at 16 per cent of the total budget. But the spending won’t be enough to reduce the backlog of road repairs — expected to grow from $300 million to $400 million over the next five years.
About one-third of the $1.6 billion it will cost to maintain and upgrade the city’s hard assets next year will come from borrowing. One-third will come from city property taxes and reserves, and one-third from the provincial and federal governments.