For the City of Toronto, a milestone moment has finally arrived after more than two decades. In a late-2024 financial review that’s informing the 2025-2026 outlook, S&P Global upgraded the City of Toronto’s credit rating from AA to AA+. This is a historic seal of approval for the city’s recent bold moves to firm up its shaky balance sheet. For taxpayers who’ve endured years of budget uncertainty and service cuts, this upgrade represents a watershed moment for how the city manages its debt and finances future infrastructure.
For Toronto, getting to an AA+ credit rating from S&P Global wasn’t easy. Indeed, the credit rating service cited the city’s new budgeting discipline as the key factor behind the upgrade. Unlike past city administrations that relied on last-minute fixes to plug massive operating budget gaps, Mayor Olivia Chow’s administration has finally implemented a long-range budgeting system to firm up the city’s finances. The historic Ontario-Toronto New Deal, which transferred the cost of maintaining the Gardiner Expressway and the Don Valley Parkway to the province, also got a nod from S&P Global as a major factor that’s taken a huge burden off Toronto’s structural budgetary pressure.
For the average taxpayer, the City of Toronto’s credit rating upgrade to AA+ from S&P Global might sound like Wall Street mumbo-jumbo. But the practical impact of a credit rating upgrade for Toronto taxpayers is considerable. Cities like Toronto borrow billions of dollars to pay for massive capital projects like the construction of a brand-new subway system or a community center or upgrading an aging water system. A credit rating upgrade means the city gets to borrow that money at a much lower interest rate from the international bond markets.
The Budget Committee is proud to say that this new rating of AA+ is not just an award, but it is a powerful financial shield for the 2026 operating budget. By virtue of being able to tap into the international market at much lower interest rates, the city government is projecting that it will save millions of taxpayer dollars each year just in straight-up interest costs. Those funds are already being channeled directly into the front-line services, ensuring that the property tax rate increases do not go as high as they otherwise would, and allowing the city to move forward with the ambitious $63.1 billion, 10-year capital infrastructure plan without immediately breaking the bank for the citizens of Toronto.
However, as we celebrate this achievement, financial experts for the city are still cautioning us that maintaining this rating requires the city to continue to demonstrate the highest level of fiscal discipline. While the rating service is still going to be monitoring the city’s ability to control operating expenditures, negotiate a favorable labor contract with massive unions, and navigate the economic ebbs and flows of post-pandemic commercial property revenues, the city council better not stray from the principles it has been using for multi-year budgeting or engage in reckless deficit spending, or this rating could just as easily be taken away. Nevertheless, as the city of Toronto moves forward into a challenging fiscal year, this rating is a foundational pillar for the city. It is a clear statement to the international investment community, the business sector, and the over-taxed citizens of Toronto that the largest economic engine in the country has once again found its financial footing.
Source: City of Toronto – S&P Global raises City of Toronto’s credit rating