Cursing My Mortgage Rates and Stumbling Into Toronto’s Billions
It was a freezing Tuesday night in early January, and I was sitting at my kitchen table in East York with a cup of lukewarm coffee and a stack of papers that made my stomach turn. My mortgage renewal notice had just arrived in the mail, and the new rate they were offering made me want to throw the whole thing in the recycling bin. After spending the last five years locked in at a decent rate, the thought of paying nearly two percentage points more on a $600,000 mortgage hit different. I started doing the math on a scrap piece of paper, calculating what my monthly payments would look like, and that’s when it hit me: if I’m sweating bullets over borrowing costs on my home, how on earth does the City of Toronto manage when it needs to borrow billions?
Before I go any further, let me get one thing straight: I’m not a CPA, a financial advisor, or some hotshot bond trader on Bay Street. I’m just a regular Toronto guy who runs this DIY taxpayer blog from my home office, so please do your own homework before making any big financial moves based on my kitchen-table ramblings. What I did do that evening was crack open my laptop, push aside the pile of utility bills and property tax notices, and start digging into how the city actually finances itself. That’s when I stumbled across the news that S&P Global had just upgraded Toronto’s credit rating from AA to AA+ in late 2024. The news was everywhere, but most of the coverage felt like it was written for people who actually understood bond markets and municipal fiscal policy.
I decided to dig deeper myself. I headed over to the official toronto.ca newsroom, pulled up the actual S&P Global press release, and started reading through the city’s multi-year budget reports. What I found was actually pretty interesting, and it directly relates to whether my property taxes are going to spike even worse than I’m already expecting. So grab a coffee, because I’m going to break down what this credit rating upgrade actually means for folks like us who live in Toronto and are tired of watching our tax bills climb higher every single year.
What I Learned (My DIY Discoveries)
After spending a couple of evenings reading through financial documents and news releases, I came away with four key takeaways that seem to matter for us regular taxpayers:
- Toronto finally got a credit upgrade after more than 20 years. S&P Global moved the city’s rating from AA to AA+, which is the first upgrade in over two decades. That’s a big deal because it signals confidence in how the city is managing its money.
- Mayor Olivia Chow’s administration switched to long-term budgeting. Instead of the old approach of patching budget holes year after year with temporary fixes, the city is now planning multi-year budgets. S&P noticed this shift toward actual fiscal discipline and rewarded it.
- The province took over the Gardiner Expressway and Don Valley Parkway maintenance costs. This is the Ontario-Toronto New Deal, and it’s huge for the city’s balance sheet. The province basically said they’d cover the ongoing costs of those two highways, which saves Toronto from having to fix potholes on the Gardiner out of its own shrinking budget.
- The city can now borrow money cheaper for its $63.1 billion, 10-year infrastructure plan. When a city’s credit rating goes up, it means banks and international investors trust it more, so they’ll lend money at lower interest rates. Toronto’s planning to spend tens of billions on subways, water systems, and community centers, and this upgrade means the bill won’t be quite as astronomical.
Digging Into the S&P Upgrade: From AA to AA+
Okay, so let me back up and explain what actually happened here, because the timing matters. In late 2024, S&P Global-one of the three biggest credit rating agencies in the world-took a fresh look at Toronto’s finances and decided to bump the city up one notch on the credit scale. If you’re not familiar with how this works, credit ratings go like this: AAA is the absolute best you can get, then AA+, AA, AA-, and so on. Toronto had been stuck at AA for more than 20 years. Think about that for a second. Through the entire boom of the 2000s, through the financial crisis of 2008, through the pandemic, through all of it-Toronto’s credit rating never budged.
What changed this time around? S&P Global specifically called out the city’s shift toward long-term budgeting practices. Under the previous city administrations, Toronto had fallen into a pattern of creating what’s basically called a budget band-aid approach. Every year, the city would come up short on cash, and instead of making tough decisions or finding real solutions, they’d patch the hole with temporary measures, cuts to services, or other accounting tricks that would just push the problem into next year’s budget. It was like fixing a leaky roof by putting a bucket under it instead of actually replacing the shingles. The whole system was unstable, and credit agencies hated it because it meant the city’s finances were unpredictable.
When Mayor Olivia Chow came into office, one of her key moves was to push the city toward actual multi-year budgeting. Instead of pretending everything would work out next year, the city started laying out a real plan for the next several years. They started looking at their operating expenses, their revenue sources, and their obligations in a way that actually made sense over time. S&P Global noticed this. In their official statement, they flagged the city’s new commitment to long-range financial planning as the primary reason they were comfortable upgrading Toronto’s rating. That’s a big vote of confidence, and it suggests that if the city sticks with this approach, there could be more positive news down the road.
The New Deal and Shifting the Gardiner Burden
Now, the S&P upgrade didn’t happen in a vacuum. There was a second massive factor that made this upgrade possible, and that’s the Ontario-Toronto New Deal. I first heard about this when I was sitting in bumper-to-bumper traffic on the Don Valley Parkway during rush hour, cursing every pothole and thinking about how much it costs to maintain these highways. That’s when the news hit that the province of Ontario had agreed to take over the ongoing maintenance and capital costs of two of the city’s biggest pieces of infrastructure: the Gardiner Expressway and the Don Valley Parkway.
Here’s why this matters so much for Toronto’s finances. The Gardiner and the DVP aren’t exactly new infrastructure anymore. They’re both aging, they both need constant maintenance, and they both cost an absolute fortune to keep in even halfway decent condition. For years, Toronto has been covering these costs out of its own budget-money that could have gone toward transit, toward fixing aging water pipes, toward community centers, or toward keeping property tax increases under control. The city estimated these maintenance costs at roughly $100 million per year, and that’s just the ongoing stuff. Major repairs and capital upgrades on top of that could run much higher.
When the province agreed to take this off Toronto’s hands, it was a game-changer for the city’s structural budget. S&P Global specifically mentioned this New Deal as a major factor in their decision to upgrade Toronto’s rating. Why? Because it meant that suddenly, Toronto’s budget was much more sustainable. The city could finally breathe a little bit on one of its biggest ongoing expenses. As someone who drives on the Gardiner and the DVP regularly-and feels every single pothole-I’m frankly relieved that the province is now responsible for keeping them somewhat decent. And knowing that this transfer of responsibility helped the city’s credit rating only makes me feel better about it.
The provincial upload also signals something broader: a recognition that Toronto’s infrastructure needs are actually a regional and provincial responsibility, not just a city responsibility. The Gardiner isn’t just a Toronto highway; it’s a major economic corridor for the entire Greater Toronto Area. Same with the DVP. Both highways carry traffic from across the region, and the province realized it made more sense for them to own and maintain that infrastructure rather than leaving it to the city to fund. That kind of cost shift is exactly what S&P Global likes to see when they’re evaluating a city’s long-term financial health.
How This Actually Impacts My Tax Bill (Borrowing Costs and Infrastructure)
Here’s the part that actually affects my wallet, and I’m going to try to explain it without getting too deep into the weeds of municipal finance. Toronto, like every major city, needs to borrow huge amounts of money to pay for big infrastructure projects. We’re talking about building new subway lines, replacing aging water mains, upgrading community centers, and all the other stuff that keeps a city functioning. These are expensive projects that you can’t just pay for out of the annual operating budget. So the city goes to the international bond markets, borrows money over a period of years or decades, and pays it back with interest.
When a city has a AA rating, they have to pay a higher interest rate on the money they borrow compared to a city with a AAA rating. When that same city gets upgraded to AA+, suddenly they get better terms. The banks and investment firms that buy municipal bonds see the upgrade as a sign that Toronto is less risky, so they’re willing to lend money at a lower rate. This might not sound like much, but when you’re talking about billions of dollars in borrowing, even a small improvement in the interest rate adds up to millions of dollars in savings over the life of the loans.
The City of Toronto is working on a $63.1 billion, 10-year capital infrastructure plan. That’s a massive amount of money for subways, water systems, roads, parks, community centers, and all the other things that make the city livable. A lot of that money is going to be borrowed on the bond markets. With the AA+ rating, the city is going to borrow that money at a lower cost than it would have at the AA rating. I’m hoping this means my property tax bill won’t spike as aggressively next year because the city won’t need to pull as much money from property taxes to cover the debt servicing costs on these borrowed funds. Though with City Hall, I’ve learned to keep my expectations modest. The savings could easily get swallowed up by other expenses.
I have no insider access to the city’s finance department, and I certainly can’t guarantee that our property tax rates will drop because of this upgrade. I’m simply sharing my interpretation of how credit ratings affect public debt borrowing, and how that theoretically should help keep tax increases more reasonable. S&P Global and the city’s budget committee are projecting that millions of dollars per year in interest savings will come from this improved borrowing rate. If the city actually uses that money to fund front-line services and keep tax increases down, that’s great. If they use it as an excuse to expand spending without improving services, then we’ve gained nothing. That’s the gamble right there.
Max’s DIY Tip: How I Track the City Budget (Without Losing My Mind)
So at this point, you might be wondering how I actually keep tabs on this stuff without turning into one of those people who reads municipal budget reports for fun at 2 AM. The truth is, there are a few places where the city makes this information pretty accessible if you know where to look. My go-to resource is the official toronto.ca website. The city has a dedicated budget and finance section where they post their annual budgets, multi-year budget forecasts, and various reports from the Budget Committee. It’s not exactly light reading, but it’s all there in plain language.
What I do is bookmark the city’s newsroom on toronto.ca and check it maybe once a month for any major announcements about budget changes, credit rating updates, or infrastructure projects that might affect my neighbourhood. The city usually puts out a press release when something significant happens, and that’s a good starting point for understanding what’s going on. From there, I can usually find the actual reports or statements that back up the announcement. When the S&P upgrade happened, I found the official rating statement right there on the city’s website, which gave me the specifics on what drove the decision.
I also follow a couple of local news sources that cover Toronto politics and budget issues. There are a few good journalists who specialize in municipal finance and who do a decent job of translating all this into plain English. By combining the official city sources with decent local news reporting, I can get a pretty good picture of what’s happening with Toronto’s finances without having to become an expert in municipal bonds or accounting standards. The key is consistency-checking in regularly rather than trying to digest everything at once.
The Catch: Why City Hall Can’t Start Spending Like Drunken Sailors
Before I get too excited about this credit upgrade and all the good stuff it might bring, I need to pump the brakes and talk about the big caveat that comes with it. S&P Global didn’t just hand Toronto a gift card to spend however they want. What they did was say,