A potential property tax increase is being floated at City Hall as officials determine how to cover a gap in housing funds from the provincial and federal governments. According to Mayor Olivia Chow, Ontario will be allocating under $8 million to Toronto under the Canada-Ontario Housing Benefit (COHB) next year, a decrease from the nearly $20 million the city received in 2025.“This means the single most effective tool to free up shelter spaces, to take people off the streets and into homes, are being undermined by other levels of government because they’re not stepping up,” said Chow.The COHB subsidizes rent, allowing those in shelters to move into rental housing more quickly and free up space in the shelter system. News of the reduction comes on top of the latest refugee shelter funding offer from the federal government which leaves the city $107 million short of what’s needed this year.“We can either stop sheltering refugee claimants, leave them on the street, which would love homelessness worse … or Torontonians will have to pay for it through their property taxes. Neither is fair,” explained Chow.“We’ve already served people assuming that money would be there by the end of the year. So there’s an immediate problem,” Councillor Shelley Carroll added. “Going forward, we’ll have a big problem in 2026.”The mayor says next year, Toronto will be short about $153 million dollars in total as a result of the cuts. She estimates that a property tax increase of about three per cent would be needed to cover the gap, though she and the city’s budget chief stress that they want to avoid it and would rather both levels of government step up. “When our shelter system is bursting at the seams, that affects our transit system, it affects our libraries, if affects our parks. It also means we have to make cuts in other parts of the city budget to fill the hole the federal government has created,” said Councillor Gord Perks.Advocates also spoke at Monday’s executive committee meeting, warning of the potentially deadly consequences of funding cuts.“I could not picture the federal government doing something that they know guarantees a negative outcome. So it shocked me,” said Reverend Eddie Jjumba with the Milliken Wesleyan Methodist Church, one of people who helped coordinate housing for refugees when many were sleeping on the streets.“Refugees are always a federal responsibility and the fact that they’re foisting this upon the city, and frankly upon citizens like myself who will absolutely provide relief to people if that’s needed. That’s egregious,” added Diana-Chan McNally, a housing advocate.The Office of the Minister of Municipal Affairs and Housing told CityNews in a statement, “Funding from the province, through the Canada-Ontario Housing Benefit, including Toronto, is calculated each year, through the standard formula – that formula is unchanged, and our investment remains whole.”Ottawa says their funding reflects the fewer refugees coming in. Both advocates and officials are disputing that, claiming that it’s just fundamentally false.