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The City of Toronto imposed a hiring freeze on non-essential workers as it grapples with a projected 2026 budget shortfall, raising concerns amongst union leaders about increased workloads and job security.
According to an internal memo viewed and reported on by the Toronto Star (confirmed by OTR through background interviews), the freeze will be implemented until early 2026.
Toronto’s operating budget, just north of $18-billion, comes from major revenue sources, such as local taxes and federal funding. Despite reliable funding, those taxes and fees do not grow with inflation.
“We are limited in terms of the opportunities that we have to generate revenues,” said Althea Hutchinson, executive director of financial planning for the City of Toronto, at a city budget consultation meeting on Wednesday evening.
The city’s operating budget was projected to fall short by $105-million by the end of the 2025 budget year. This hiring freeze is intended to alleviate expected pressure following the next fiscal year.
“This action will ensure we manage staffing decisions carefully, demonstrating fiscal responsibility, and maintain compliance with municipal requirements to balance the budget,” said Russell Baker, director, media relations and issues management at the City of Toronto, in a statement obtained by OTR.
It’s unclear yet how this freeze will affect non-essential or essential services in Toronto. “I think it’s a way to diminish the significance of what a hiring slowdown or freeze may be,” said Nas Yadollahi, Local 79 CUPE president, when asked about the importance of vital services to daily operations in the city.
“How could you determine the importance of people who are in information technology, or our bylaw officers, public health nurses [and] transportation officers?” she asked. “They may not be considered to be essential, but as far as we’re concerned, [they’re] essential to the daily operations of the City of Toronto.”
She said she believes cutting down on non-essential workers will put a heavier burden on existing workers. “It’s going to be very hard to attract people to these jobs that are increasingly demanding because of increased workloads, and it’s going to impact service delivery as well,” she said.
According to Hutchinson, the city faces a yearly “opening pressure,” a budget shortfall they need to navigate to keep services running at consistent levels. In 2024, the budget covered six months of costs for certain new spending, but the 2025 budget had to cover the entire year. The forecasted opening pressure for 2026 is $1.072-billion.
Closing the gap
She said covering the budget shortfall through property taxes would result in a 22 per cent increase, which can be safely ruled out. Another proposed option, she added, is to solve the gap through cuts of essential services such as fire, parks and paramedics.
Instead, the city has decided to turn to internal efficiencies. “We provided targets to divisions and agencies for them to go out and find efficiencies,” said Hutchinson. She ensures the efficiencies brought forward should not negatively impact the experience of community members.
“The goal really is to get back to what we call a pre-pandemic opening budget pressure, which was anywhere from $500-million to $700-million,” Hutchinson concluded.
In producing this story we used Otter.ai.
