As a follow-up to my previous articles, I dove into past financial reports from the TTC going back to 2000. Most of these are not available online, but my hard-copy archives go back a very long way.
TTC subsidies are a branch of higher mathematics. Indeed, there are many philosophical discussions about them and competing claims for which governments pay more, or less, or nothing at all. This article is intended to present the information in one convenient place.
You will have to take it on faith that I have not garbled the information here, and you really don’t want the underlying spreadsheet, trust me. It took hours to get all of the year-to-year information to balance. That’s my problem, not yours.
Everyone loves pictures, and so we begin with a set of charts. You may want to open these concurrently with the discussion so that you can follow along.
In each of these charts I have used colours appropriate to the political stripe of the source for funds. Toronto is environmentally green, Ontario is Liberal Red, Ottawa is Tory Blue, and the small contribution from others (mainly Waterfront Toronto and York Region) is gray. Gas tax subsidies are shown separately to identify this ongoing program by contrast with one-time, project-oriented funding.
This is the simplest of the charts, and it tracks the gradual rise in operating subsidies paid to the TTC, most of which is borne by the City of Toronto. For 2010, the bar will be higher, and will be entirely green. The sections in red are one-time Ontario contributions to the operating budget. Those in pink are the gas tax revenue diverted to operations from capital. This practice ended in 2009.
Note that this subsidy includes the cost of Wheel-Trans which receives no special subsidy from Queen’s Park. By 2009, this amounted to $77-million.
Looking at this chart, it is important to remember that this is the subsidy, not the total budget, and the percentage change in the budget is different from the change in the subsidy depending on the relative contribution of fares in each year.
Capital Subsidies (As Spent)
The Capital Subsidy chart shows current year spending for capital projects in each year. As we will see below, this is completely different from payments received from Queen’s Park and Ottawa.
In the early years, the City capital spending is high because the last stage of the Sheppard Subway project was paid for with City funds.
Federal and Provincial contributions kick in starting in 2002. As we will see on the next chart, much of this was in the form of announcements, and the money did not actually flow for a few years until the agreements were signed. The City carried these costs on its books and eventually was reimbursed. I have allocated the moneys to the years in which they were spent, not to when they were received, to give a proper historical view.
In 2005, gas taxes came into play. There was a base allocation, and in 2005, a special allocation from Ottawa. The amounts settle down in 2006-2009 (note that Federal contribution outweighs the Provincial one in 2009 because some Ontario money goes to the Operating budget).
What is important in this chart is that the gas taxes come nowhere near the level needed to fund TTC capital spending at a time when the big-ticket projects are only in the early stages. Any move to shift the funding source away from general revenue or reserves to the gas tax will require a large increase in that tax.
A note about the Spadina Subway extension: This project is managed by the TTC and funded by four governments. The proportions of the funding are (roughly):
- 20% City of Toronto
- 13% York Region
- 40% Ontario
- 27% Ottawa
Ontario’s contribution as well as $75-million from Ottawa sits in a reserve called the “Move Ontario Trust” which is administered by the Province. The total project revenue includes an estimated $189.1-million in interest earnings on this fund, and I have pro-rated the interest to the two governments.
For 2008 and 2009, spending on the Spadina project has been credited to each of the four governments in proportion to their share of the entire project. Whether this is how they actually paid, I don’t know as the financial statements treat the project as a single expense. Total spending on Spadina for the two years was only $107.5m as the project did not enter its main construction phase until 2010.
Capital Subsidies (As Received)
The Capital Payments chart shows a very different picture from the “as spent” chart. The amounts for the City of Toronto and for “Other” are identical because these are both “pay as you play” contributions. However, from 2001 to 2006, governments promised more than they delivered because the paperwork took precedence.
In 2007, Ontario made settlement payments to the City for many of its then-outstanding subsidy programs. This included payments for costs incurred in previous years.
Also in 2007, Ottawa made a large contribution via the “Public Transit Capital Trust”.
Both the Ontario and Ottawa funds have earned interest while the reserves created with them were spent. By the end of 2009, the Ottawa funding was exhausted, and much of the Ontario funding was spent or earmarked for the near future.
In 2008, Ontario made a large contribution under the MoveOntario2020 program that pays a bit toward the Transit City projects, but mainly is intended for the Yonge Subway signal project. Much of this was unspent at yearend 2009, and it is unclear how the accounting will be handled in future years now that Transit City projects are to be owned by the Province.
The two large red bars for 2007-8 on the “as received” chart show how Ontario shovelled money to transit projects and reserves when they had cash to spare, but not as an organized, predictable funding source. By 2009, Provincial spending consisted almost entirely of Gas Tax revenue.
With the move to Ontario ownership of the Transit City lines, it will become more difficult to track all of the funding because payments will not show up on the TTC accounts. For example, Ottawa is paying 1/3 of the Sheppard East LRT, but this transaction is entirely at a Provincial level. TTC work on the project will be billed to Metrolinx, but this will not represent the full cost. For this we will have to depend on the openness, such as it might be, of the Metrolinx financial statements.
Receivables and Reserves
The final chart shows the buildup of subsidies that had been booked by the TTC but not paid by Ontario and Ottawa up to 2006.
In 2007 and 2008, large payments by both governments established reserves against which the TTC will draw.
Note that this does not include the Spadina Subway extension funds because these are held by the Province, not by the City. Moreover, any funding promises that are not accompanied by actual cash are omitted as they do not form part of the TTC’s financial statements. In any event, such promises represent future spending and would have no effect on the proportions or amounts in past years.