Item - 2016.EX20.1

City Council considered Items EX20.1 and EX20.2 together.

The City Manager gave a presentation to City Council on Items EX20.1, EX20.2 and EX20.3.

The Executive Committee recommends that:

1.  City Council receive the report (November 23, 2016) from the City Manager, the Deputy City Manager and Chief Financial Officer, the Deputy City Manager, Cluster A and the Deputy City Manager, Cluster B for information.

The City Manager and the Deputy City Manager and Chief Financial Officer gave a presentation on EX20.1, EX20.2, and EX20.3 - Long-Term Financial Direction Update, Revenue Strategy, and Asset Optimization reports.

This report provides an update on the City's Long-Term Financial Plan, as directed by Council in June 2016 (EX15.1). The Plan is currently under development and will provide scenarios for a sustainable financial framework for municipal services and city-building investments, involving both expense and revenue measures.

Long-term expense and revenue considerations should be integral to the annual budget process. Therefore this update report is being brought forward to inform current Council deliberations around the City's rate- and tax-supported budgets as follows:

-  2017 rate-supported operating and capital budgets (launched at the November 4, 2016 meeting of Budget Committee, finalized at the December 13, 2016 meeting of Council)

-  2017 tax-supported operating and capital budgets and 2018 outlook (launched at the December 6, 2016 meeting of Budget Committee, finalized at the February 15, 2017 meeting of Council).

In addition, two closely aligned staff reports are being brought forward to the Executive Committee on December 1, as requested by Council:

-  Asset Optimization Review - Toronto Hydro Corporation and Toronto Parking Authority

-  The City of Toronto's Immediate and Longer-Term Revenue Strategy Direction.

Each of the above reports will be presented on a standalone basis reviewed by Council and Committee as a separate items. In practice, however, issues and potential policy responses overlap - including decisions in response to these interrelated challenges.

The absence of integrated financial planning - across budgets, program areas and annual cycles - is a longstanding challenge for City governance and Council decision making. It has contributed to the emergence of significant gaps between Council's current fiscal framework and long-term aspirations.

This report presents a brief summary of the key financial challenges facing the City in order to provide a basis for integrated decision making in 2017 and beyond.

The primary fiscal challenges that must be addressed include:

-  2017 preliminary operating budget pressures and resolution of a balanced budget

-  2017-2026 preliminary capital plan and pressures

-  Continued unfunded capital projects

-  Improving performance of City assets

-  Long-term expense management, particularly with regard to City agencies

-  Long-term revenue management

The report also provides a summary of key initiatives advanced in support of the Long-Term Financial Plan over the past six months. This work includes various corporate and program-level initiatives, including a Council-directed public engagement process. This consultation was launched in early November and will be completed by the second quarter of 2017.

Council consideration of a consolidated set of expense and revenue options under the Long-Term Financial Plan is expected in the second quarter of 2017, well in advance of 2018 budget decisions.