Transit: the Money Game

A portion of downtown Toronto TTC service. Copyright the Toronto Transit Commission, 2012.

The TTC, despite its warts (or perhaps, because of its warts) holds a special place in Toronto. A city institution, the sheer coverage of the transit system is pretty amazing from a bird's eye view perspective. With three (and a "RT" half) Subway lines, 11 streetcar lines, and over 150 bus routes, it can push a lot of people around the city.

However, such extensive coverage comes at a steep cost; the TTC's annual operating budget is about $1.5 billion dollars, and the TTC only brings in about two thirds of that in revenue (i.e. box fare and advertisement). The rest comes from the City of Toronto Operating Budget, costing the city approximately $400 million. For reference (and as a nod to my girlfriend's hometown), this is about three times the total operational of the City of Saint John.

Every year, the question about how to pay for the service flares up. Without some sort of subsidy from the province (and there is little indication there will be one anytime in the near future), the city struggles with fulfilling its provincial mandate to provide service, maintaining the existing fleet, and not ticking off taxpayers across the city with a property tax increase. For reference (by my rough calculations, using a handy calculator the Toronto Star put on its website last year), if the City of Toronto had to come up with $400 million for their budget through property taxes, it would result in an increase of over 15% (probably closer to 17.5%). Even the safest NDP ridings in Toronto would probably see their respective left-wing councillors publicly torn in half.

But there is another perspective on it too; I remember we had a guest speaker in one of my planning classes once who was a transit advocate. He made the intriguing point that if we "treated transit like we treat our police and firefighters" we wouldn't be having a transit conversation; we'd be full steam ahead on creating new transit routes and improving our crumbling infrastructure. Alas, public transit brings images of crowded vehicles and delays, whereas police and firefighters conjure images of grief and loss; it's any wonder why transit remains a hard topic to agree on in any city (let alone Toronto).

At the end of the day however, that $400 million has to come from somewhere. There are a number of "solutions" to addressing the budget gap (outside of cutting services), but most of them aren't pretty (and to be clear, there isn't necessarily one clear solution):

1. Raise TTC fares. This has been one of the strategies that the TTC has taken in order to pay for its operation. Fare raises of 10 to 25 cents every couple of years can meet inflation and contribute to infrastructure repair. The downside however, is such fare increases hits TTC riders directly, leaving low-wage, unemployed, or fixed income riders in a lurch. It also discourages ridership, potentially driving people into using their personal vehicles (or not taking trips at all).

2. Implement transit "zones". Many other transit systems do this. Effectively, the problem with a "flat rate" TTC fare is that it punishes "short" riders, and subsidizes "long" (or poorly utilized) riders. Implementing a "zone" (where a rider would pay an additional fee to cross it) would cause riders to pay a fee that more accurately represents the cost of carrying them. However, logistics aside, this could hurt the people who need public transit it the most: the people who live in suburban Toronto. If we view transit as a means to get people from place A to place B, forcing suburban riders (many of whom are from the poorest areas of the city) to pay or use their own vehicles more makes poor sense.

3. Implement a tax to pay for it. The goal here is to penalize vehicle use, and use the revenue gained to pay for transit. The City of Toronto has four ways it could potentially do this. The first is to use their special taxation powers to levy a tax on vehicle ownership. There actually used to be a "vehicle registration tax" of $60 here in Toronto (it brought in about $64 million annually). That was scrapped by the current administration. A second alternative would be a parking tax, where - as the name suggests - people would pay more to park in Toronto (it has been suggested that such a tax would bring in an estimated $90 million). A third option would be some sort of road toll such as a "congestion charge" on some of Toronto's busiest highways (the Don Valley Parkway - DVP - and the Gardiner Expressway). Finally, some sort of additional tax (either on gas or a sales tax) could generate a lot of new revenue. These last three options are suggested to have the potential to bring in at least a billion dollars each.

There are many logistical issues to be concerned about, however. For example if you were to put a toll on the DVP, what would be the alternatives that a driver could take? Pushing the traffic onto another highway may have unintended consequences (such as creating congestion elsewhere), but more importantly, would there be a reliable transit alternative? Certainly, the Yonge subway line is packed as it is. There are also constitutional issues to work around; Toronto has neither the authority to implement a "gas" tax, nor a sales tax. It would require provincial permission for both, dangerous territory for a provincial government with many other big cities (such as Ottawa, Peel, and Hamilton) come looking for money too.

Still, my position is that the provincial government needs to start taking some serious responsibility in funding transit. While any government would be squeamish at increasing sales tax when they're trying to recover from a recession, the costs of not doing so are potentially much, much higher. I won't regale you, the reader, with the annual cost to cities (and the province itself) that is incurred by traffic congestion, nor will I bandy some numbers around about the cost to the environment and human life, nor will I remind you how expensive oil is getting (and therefore the need to reduce the amount society uses).

The bottom line is that if the government is in the business of moving people, it has to pony up the cash to pay for the infrastructure (and critically, the ongoing maintenance, a figure too often lost in transit debates) to move people. Getting people off the road and into buses, trains, and subways requires giving people reasons to use transit: frequent service, quality service, and reliable service. These things cost money, money the province can get. The best thing a provincial government could do is to use the tax space that the Harper government created to start investing in the future of cities. And I mean all cities within their jurisdiction, not just us mugs in Toronto.

Safe, reliable, clean public transit is critical to the future of our cities; the longer we wait, the more expensive it will be to clean up the mess that their absence causes.