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Who Pays for Transit?

Every so often, the question of subsidies shows up in comment threads here.  My usual explanation is “well, it depends, and it’s complicated”.

For those of you who want to see just how complicated, you can look at the TTC’s draft financial statements for 2008.  Scroll down to Notes 12 and 13 which detail where the operating subsidies come from and go to, and in much more excruciating detail, how the capital subsidies work.

This is a testimonial to the madness of project-based, partisan announcements.  Every government has to come up with its own program.  Even if an old one worked, we need a new one clothed in new party colours.  All of this takes a lot of accounting just to keep track that monies received are spent on only those projects for which they were announced.  Perish the thought that a Tory Blue dollar might accidently wind up paying for a Liberal Red bus, or that money intended for “Green” programs simply pays for keeping the transit system going.

We hear a lot from governments about getting out of the way of private business, of simplifying regulations and reporting because this is a huge burden on the private sector.  Canada’s competitiveness depends on the simplest and shortest rules possible.  The concept has not yet reached public sector regulation where the intent seems to be to strangle any ability to use funding productively and quickly.

3 thoughts on “Who Pays for Transit?”

  1. Inter-governmental funding is always a problem. Every funding should be tied to certain conditions according to this logic. Look at the US federal government. It took them years and they still have not procure enough F22 Raptor jets. This is all within one level of government.

    The TTC really should have its own way to procure money. This way it can spend the money at it pleases. Property taxes alone cannot fund a real transit. This is why we need gaming revenues. It is predictable, large and stable. Sales tax rise and fall with the economy.

    On a side note, the casinos in Ontario pays private bus operators like AZ buses over $50 per passenger. Bringing a loaded motor coach to Rama will net at least $2400. Nowadays, there are more Rama bus than some small transit systems in Ontario.

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  2. There should only be one level of government fully responsible. The problem in this country is that we don’t know anymore who does what. Our levels of government behave like computer technicians: if something doesn’t work, it’s someone else’s fault!

    It would be much better if each level of government was financially autonomous and independent from each other. At least, we would know who to blame! All these transfers of funds between levels of government create confusion and can be unfair for others.

    Take the funding of Toronto’s new streetcars. The TTC is asking the federal government to pay 1/3 of the costs. Why should the federal government pay 1/3 of this contract? The replacement of subway cars in Montreal is valued at the same price and will be funded 75% by the Government of Quebec and 25% by the Société de transport de Montréal (STM). Why should the federal government pay in the case of Toronto? Especially with what’s already been announced with the Building Canada plan:

    http://www.ripefruit.ca/2009/05/15/fonds-federaux-attribues-en-transport-en-commun/

    Now, I’m not blaming Toronto here, I know the money has to come from somewhere and cities don’t have enough revenues. I’m just saying this country’s governance is a mess. We need autonomous metropolitan areas.

    Steve: The biggest problem in Toronto is that the transit systems are not given access to income streams like sales taxes that can be predicted from year to year and that would generate enough revenue to cover their needs. Instead we get dribs and drabs, often on a limited term basis with many constraints on the use of the funds.

    However, I do agree that we have in part created the problem by relying on the multi-partite arrangements where more time is spent on negotiations than on actually planning and building. As for an autonomous Toronto, we would still have to address the issue of all of the travellers from the GTA who create demand, but are not taxed here. It needs to be a city region, not just the 416.

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  3. I agree, an autonomous local government’s boundaries should include at least the entire urban area as defined by Statistics Canada. In the case of Toronto, extending it to the entire GTA probably makes sense as it will most likely become one single urban area in the future.

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