After years of howling that taxes in Toronto are too high, that no business would dream of locating here, that the Toronto economy is going down the tubes because politicians are not generous enough with their handouts, the business community has discovered transit funding as a major issue.
The Toronto Board of Trade published The Move Ahead: Funding “The Big Move”, a document arguing that lack of infrastructure investment, specifically in transit, is a serious impediment to economic vitality in the Greater Toronto Area. The Board’s report is based on a June 2008 Metrolinx report, but adds observations about the mechanics, implications and practicality of various revenue-generating measures, as well as examples of their use in other cities.
The possible tools are subdivied into three groups:
Large (Over $1-billion annually):
- $1 per day surcharge on commercial parking spaces
- 1 percent regional sales tax
- $.10 per litre fuel tax
- $.10 per km travelled toll on 400-series highways, QEW, Gardiner and DVP
- unspecified per km toll on all auto travel
- unspecified congestion pricing fee
Medium (Over $500-million annually):
- National Transit Strategy modelled on Gas Tax (it is unclear how this differs from the fuel tax in the “large” list except that it would be charged at a national rather than a regional level)
- Predictable Long Term Funding (apparently from general revenue)
- Infrastructure Bonds (dedicated to transit projects rather than general revenue, possibly with associated tax incentives for bondholders)
- Employer payroll tax at $250/employee or a tax of .35% on gross earnings
- Tax Increment Financing (no dollar value assigned, predictability of revenue stream uncertain)
- Land Value Enhancement (in effect, a local tax on property whose value rises due to transit investment)
- High Occupancy Lane Tolls
- Vehicle Registration Fees
- Utility Levy
- Full cost recovery transit fares (for operating and, possibly, for capital)
- Alternative service delivery (typically PPPs)
I will leave interested readers to browse the details of the Board’s analysis, but this publication is useful on a few counts. First, it brings the debate about transit financing — the amounts needed and the tools available — out into the open. Queen’s Park’s desire to muzzle the debate until June 2013 was shortsighted when it was incorporated in the Metrolinx Act, and now downright foolhardy given the much-changed financial situation. Second, it presents transit not as something we do for the poor, the aged, the downtrodden, but as an integral, core service to the entire region. The embrace of this viewpoint by the business community is a vital change in the dialogue.
For those who know the Metrolinx 2008 report, the numbers are not particularly startling. What is important is that there is no magic bullet, no simple tweak we can make on the taxation system, broadly speaking, that will generate the money needed to fund the capital and operating requirements of The Big Move, not to mention the large increases this will trigger in local transit service needs and subsidies. The Board of Trade is fairly conservative in their expectations of the benefits and effects of various options. Even for PPPs, the Board notes the importance of clear objectives for the partnership and, by implication, the requirement that such an arrangement exist for concrete economic reasons.
Notable by their absence are two fundamental issues:
- There is no discussion of land use. As the region’s population grows, the manner in which new residents and businesses are accommodated has a fundamental effect on the cost and structure of any new public transit services. It may sound like a broken record to say this, but we can pay for expensive transportation through gridlock on roads and a scattered, underserved transit network, or we can force development to follow a “transit friendly” pattern. The history of the GTA suggests that sprawl will not be contained politically.
- There is no discussion of future energy pricing. If energy cost and availability, coupled with commute distances and times, increase substantially above the rate of inflation, but average incomes fall due to international competition, there will be a much greater demand for transit service than even the most optimistic “Big Move” working papers forecast. What would this scenario do both to the scope of transit construction and service, and the speed with which new and improved services must be implemented?
The Board of Trade has set the stage for the discussion, and Metrolinx must follow through on the challenge. The agency must not simply react to short-term political and financial circumstances, but provide clear alternative plans showing “what ifs” for the future we might face in the GTA.