The TTC’s operating and capital budgets are a major part of the City of Toronto’s overall budget, and a considerable amount of TTC spending is provided directly by Council.
In 2010, the operating subsidy will be paid entirely by the City with no contribution from Queen’s Park. This subsidy will be about $420-million, and in the absence of a fare increase, this will rise to $500-million in 2011. The final 2010 figure will not be known until the year-long effects of ridership growth and the 2010 fare increase are clear. Notwithstanding repeated statements from Queen’s Park and various mayoral candidates, no operating subsidy flows to the TTC from the Province.
The capital budget is complex because there are many sources of subsidy. Some of these are project-specific such as the contributions by Ottawa, Queen’s Park and York Region to the Spadina Subway Extension. Others are intended to support a specific class of project such as security upgrades or vehicle replacements. Still others are not earmarked, and these sources fund projects as needed.
In 2009, the capital subsidies totalled $742-million. Of this, $333-million came from the City, $195-million from Queen’s Park and $208-million from Ottawa. The remaining $6-million came from other sources such as Waterfront Toronto. Gas tax revenues from Ottawa and Queen’s Park amounted to about $320-million in 2009, and of this, slightly more than half of the Provincial money was used as an operating subsidy. In 2010, all of the gas taxes are going to the Capital Budget. (For details on subsidy arrangements, please refer to the TTC Financial Statements for 2009.)
Whatever is left over after all of the external subsidies is funded by the City. These monies are raised partly from debt and partly as “capital from current” in the City’s operating budget.
A critical problem going forward in capital planning for the City is that various funding programs at both senior levels are drying up, and Toronto will be left with only gas taxes and the cost sharing on Metrolinx projects. This leaves the City open to a greater call for TTC capital in future years, a problem compounded by the growth in planned capital spending. Recent announcements of Provincial funding for transit network expansion contribute nothing to ongoing capital requirements for system renewal.
In this context, proper control and oversight by the City over TTC budgeting is essential. However, the TTC has a long history of operating as an independent agency managing its own accounts. This may have been acceptable before the City was the TTC’s primary funder, but not today, especially considering the effect of unexpected changes in TTC financial results and requirements on the City’s books.