Today’s Ontario Budget announced that as part of Expenditure Management, spending on Metrolinx projects will be delayed and a program that funded bus replacements will be cancelled.

In the current fiscal environment, the government has revised the scope and timing of some capital investments. To help manage infrastructure spending over the coming years, the government will:

• Work with Metrolinx to phase construction of transit projects, which would result in approximately $4 billion in appropriation savings and reduced borrowing over the next five years
• Eliminate the Ontario Bus Replacement Program and include bus replacement costs as eligible expenses under the gas tax funding program, which supports municipal transit. The government acknowledges that municipalities have current commitments under the Ontario Bus Replacement Program, and will work with them to ensure these commitments are met by providing one-time funding of almost $174 million in 2009-10.

This will specifically delay work on all Transit City projects as well as VIVA’s BRT network.  Over the next few months, Metrolinx will have to figure out a new project list.  The 15 and 25 year plans of “The Big Move” are now in tatters.

I can read the events pessimistically in the sense that the hoped-for level of transit funding will never occur.  Certainly major expansion is on the back burner, and there is no announced funding to support operating costs of local transit systems.  Alternately, an optimistic view is that the approach is “not now” because the revenue needed to fund transit growth demands some new form of taxation, and with an election in 2011, nobody at Queen’s Park wants to address the issue.

Sadly, I tend to be a pessimist based on past experience.  Jobs, health care and education are portfolios that touch all parts of Ontario, while transit is Toronto-centric.  Only when the economy is booming, or appears to be as it was only a few years ago, can Queen’s Park afford to announce large-scale spending in a new area.  Now, Queen’s Park has not just capped its commitments, it has retrenched.

According to the Globe and Mail,

The government is asking Metrolinx, its regional transportation agency, to submit a proposal phasing in the projects for a total of $4-billion in savings over five years, starting in 2010-2011. An official said it would take a few months for the government to decide which projects will be delayed.

That $4-billion is almost half of the previously announced $9.6-billion commitment to Metrolinx projects, and quite serious cuts or deferals will be needed to achieve this level of saving.

Almost certainly, the Finch LRT line will be delayed and cut back in scope.  The proposed section from Yonge to Don Mills and Sheppard, added to the project by Queen’s Park, never made sense and is an easy casualty.  However, the western end of the line may also be truncated at Finch West Station (Keele and Finch) if it is built at all.  This would leave open the whole question of how a northern “crosstown” route would be created either on Finch, or via a western extension of the Sheppard Subway to Downsview.  Whatever the choice, there’s no money to build it today.

The Scarborough RT has already been announced as cutting back to Sheppard rather than continuing to Malvern.  The challenge here is that the RT itself is wearing out and may not survive until 2015 when it is supposed to be an integral part of the Pan Am Games transit service.

The Sheppard LRT is already under construction, and this project is likely safe because of its location in the network sharing infrastructure with the SRT.

The Eglinton LRT, most expensive of all Transit City projects, is the easiest to defer while producing large scale budget savings.  No substantive work has been done yet, and even if it stayed on schedule, the airport connection (a holy grail of Pan Am Games supporters) would not be ready for 2015.  No doubt, the technology debates for this route will continue to rage in political, professional and blogging circles.

Other parts of Transit City are much less advanced in planning, and these may simply fall off the table without a strong advocate at the city level.  Jane does not make sense without at least one of Finch or Eglinton that would share a carhouse.  Don Mills would connect with Sheppard, but the combined fleets required for Sheppard, the SRT and Don Mills would probably exceed the capacity at Conlins Road Carhouse.  Scarborough/Malvern only makes sense if there is an aggressive plan to increase population density in the corridor.  In effect, only a Scarborough subnetwork of Transit City may remain.

Subway advocates have little to cheer for in this announcement.  The Transit City funding that some would redirect to subway construction is unlikely to reappear, and very expensive projects such as the Downtown Relief Line and Richmond Hill extension will have to fight hard for capital.

Waterfront West, that poor orphan of the Transit City network, is almost certainly dead at this point, and I wouldn’t hold my breath waiting for the Bremner Boulevard streetcar either.

Lurking in the background of this mess is the question of transit financing.  When Metrolinx was created, we heard bold statements about an “investment strategy” that would create transit lines out of thin air with no provincial exposure to debt costs until future decades.  The accounting sounded like a Wall Street Ponzi scheme even then, and it’s clear now that building a huge transit network on the never-never was simply not workable.

The original Metrolinx board, mainly politicians from the GTA governments, became restive about financing not just for their bold plans, but for the local network improvements that would be essential as feeders to the regional network.  For their troubles, they were dumped and replaced by a gaggle of private sector experts whose main public contribution thus far has been to sit meekly at Board meetings and rubber stamp whatever reports are placed in front of them.  If they are making some miraculous contribution to the future of GTA transit, it is invisible.  The Board will head off for its annual retreat next week, and it might well consider how to make itself and its “Big Move” relevant.

The single most important part of any transit plan is the money to build it.  This comes either from existing income streams (unlikely given that they’re all spoken for and the government is in deficit) or from some new levy.  The opponents of new taxes will rail against government waste all they like, but the real truth is that major new programs like this are not affordable unless someone pays for them.

Private sector “partnerships” are nothing more than accounting sleight-of-hand.  Money must still be spent to build lines, and more money must be found to operate them.  At the end of the day, we the riders and taxpayers pay the cost.  One may argue about the relative efficiency of private and public sector project delivery, but even the most optimistic savings on that account won’t come near bridging the gap between project costs and available funding.

Some argue that “transferring risk” to the private sector will make them sharpen their pencils and deliver projects on better schedules and at lower cost.  Sadly, the private sector hates risk and has two basic approaches to it:

• boost the contingency in their pricing to allow for the risk they must assume, or
• be prepared to walk away from their contract if the penalties for non-performance wipe out any hoped-for profit (in effect limiting the “risk” to the sunk investment)

One mayoral candidate has raised the issue of road tolls suggesting a $5 fee for using Toronto’s DVP and Gardiner Expressways with the money going to fund a large subway network.  Leaving aside whether I agree with that network, there are larger issues here:

• Any road toll must exist on the entire expressway network, not just the “Toronto” component.  This brings in the 400-series highways that are under Queen’s Park’s control.
• Tolling will drive some traffic onto local streets making local gridlock even worse than it is now.
• If motorists are to bear the cost of transit expansion, why should this only be applied to expressway users?  What about a regional premium in gas tax?
• Why should the cost only be borne by motorists?  What about a regional sales tax?
• Will transit operations continued to be funded from local property taxes, or will new transit revenue streams such as sales tax be shared between operating and capital budgets?

The existing Ontario Bus Replacement program is itself “replaced” with “eligibility” to use gas tax revenue.  This sounds good, but in fact the annual gas tax revenue to Toronto (less than $75-million from Queen’s Park) is less than one quarter of the ongoing capital spending for the existing TTC system.  There is no “spare” gas tax money available to replace the roughly $10-million annually the TTC expected to receive from OBRP.

For comic relief, read about MoveOntario 2020 on the Premier’s website.  It is a product of a very different time.