Toronto’s Taxes and the TTC

Last night, Toronto Council, by a majority of 23 of 22, deferred a move to levy new taxes on vehicle licences and land transfers until the fall.  This will likely cost the city over $350-million in lost revenue in 2008 toward an expected deficit of $500-million.

This move is all politics and no common sense.

  • Advocates of deferring the vote argue that this will hold Queen’s Park’s feet to the fire and make funding Toronto, specifically uploading social services costs, an election issue.  Please don’t insult our intelligence.  Running on a platform of screwing Toronto is a basic part of Provincial politics.  Maybe John Tory will claim that he will fix the problems of downloading, but like his promises on the gas tax, what does he plan to cut so that he can pay to upload Toronto’s costs?
  • The right wing organized a very strong lobby against these taxes even though the lion’s share of the cost (the land transfer tax) would not apply to most Torontonians.  The same business groups who wanted Queen’s Park to give Toronto more taxing powers screamed like the well-fattened pigs they are when Toronto actually tried to exercise them.
  • Many homeowners think, incorrectly, that Toronto Council and Mayor Miller are responsible for tax hikes due to Market Value Assessment.  In fact, this was a provincial initiative that McGuinty & Co. have done little to redress other than reining in the agency that handles assessments for one year, long enough to get past the election.  Opponents of new taxes are more than happy to take the misguided support this situation creates.
  • Opponents of new taxes want the City to “get its house in order”, but cite only small-change projects and privatization when asked how this would be done.  Although renovations to City Hall (especially to the Mayor’s office) may have brought criticism, and might have been deferred, the total saving is only a few millions on a one-time basis out of a budget much, much larger.  Privatization is a pet project of the business community who want to get their snouts into the municipal trough, and of the anti-labour folks whose solution to every problem is to get rid of the unions.  In case anyone hasn’t been paying attention, the TTC, one of the largest blocks of organized labour in Toronto, is having trouble attracting new employees.  Imagine what would happen with lower wages and poorer working conditions.

On the Mayor’s side, there has been a great reluctance to publicize the impact of a large budget deficit in 2008.  No doubt this is an attempt to take the high road, to avoid accusations of unfounded scare tactics.  Miller likes to be diplomatic, but the city needs to know the truth of what will happen without the new revenues.

The total operating budget is $7.8-billion, and the new taxes would have raised about 5% of that amount.  Let’s see where “sharing the pain” will take us at the TTC.

The TTC will receive just under $250-million from the City this year.  Even without additional service, inflation will push up the total TTC budget of $1.1-billion by $33-to-55-million in 2008 (3-to-5%).  If we add a 5% cut in City funding ($12.5-million), this will leave the TTC with a gap of $46-to-67-million going into 2008 before they even consider additional services such as the Ridership Growth Strategy, additional security staff and improvements in the level of facility maintenance.  A gap of $100-million would not be unreasonable, all things considered, and it could be higher.

Assuming no other cuts in funding sources (beyond the City share), this would translate to a fare increase of 15-20%, possibly more depending on tradeoffs between improving service, keeping ridership healthy and minimizing the impact on fares. 

My preference, even if it comes to this, is to preserve and improve service even if we must increase fares.  Service quality is the single greatest complaint existing riders have about the TTC, and potential new riders will stay in their cars if we don’t offer them a better product.  The worst possible scenario is to keep fares low for sociopolitical reasons while the service declines and the “choice” riders (who also have more political clout) exercise their options.  Driving people away from transit is completely contrary to what politicians of every stripe profess to support.

On the capital side, the ability of the City to borrow for capital maintenance and expansion is directly related to its ability to raise revenue and carry the debt.  Say goodbye to many cherished transit projects unless all responsibility for transit capital funding is taken up by Queen’s Park and Ottawa.  Even then, we will get the projects they want to fund, not the projects we actually need.

I hope that yesterday’s vote was mainly grandstanding by Councillors who will vote for more taxes when they absolutely must, but who want to be seen on the “right” side of the argument for one brief moment.  Tweaking the mayor’s nose on an issue this big may play well in the press, but in the long term it is deeply irresponsible. 

Today, opponents of new taxes bask in the glow of their “reasonable” alternative position.  Tomorrow, as the potholes grow, the community centres close and the buses don’t even have room on the roof, their folly will be revealed for all to see.