The Toronto Star reported on July 30 that the TTC may defer its order for new streetcars in a move to free up room in the capital budget.
As I have often written here, the TTC’s capital plans badly strain the ability of the City of Toronto to carry the ongoing spending, and constant cutbacks in funding from Queen’s Park are a major problem. Every chance they get, provincial Ministers tell us about billions “committed” to transit in the GTA. The problem is that much of the actual spending won’t happen for many years, if ever, while current spending is a major problem.
Many programs that funded parts of the TTC capital budget have wound down, and the only provincial funding stream the TTC can actually count on is the gas tax. That brings in about $150-million annually, and even this is partly split with the operating budget. Meanwhile, the TTC has reached a point where it classifies almost every project as “state of good repair”. That incantation, brought to us by former Chief General Manager David Gunn, is supposed to indicate the scope of work and funding needed just to keep the lights on and the trains rolling.
However, it has been abused in TTC budgets to include projects such as provisions for additional capacity on the subway. This is not to say the capacity isn’t needed, but that’s a different class of spending, certainly one that should include regional, not just local funding.
The order for 200 new low floor light rail vehicles (LFLRVs) for the “legacy” streetcar system has a pricetag of about $1.2-billion including inflation, spare parts and warranty coverage. Toronto gambled when it put this deal together that Ottawa would come in for 1/3, but they chose not to participate. Indeed, Ottawa has always been selective in its spending on transit across the country preferring to drop money where there is a time limit to the spending, where funding is project-specific and doesn’t imply or create an ongoing commitment to all cities. Ottawa’s only standing funding is from the federal gas tax, and even that falls in relative value over time because it is not indexed.
Toronto’s and TTC’s budgeting practices have not helped. In a bid to keep the potential draw on the City’s borrowing capacity under control, at least on paper, TTC projects have been either shuffled off beyond the 10-year planning window, or simply ignored as a potential pressure. Confusion about where and when funding might actually arrive adds to the problem.
Although the TTC produces multi-year capital and operating budget projections, there is never any explanation or discussion about the options that would shape future funding. Every year, more projects appear on the list, some the inevitable result of decisions already taken (e.g. if you increase the size of the subway fleet, you need more carhouse space to store the trains, and more staff to operate and maintain them).
Adding to this mess is the Mayor’s desire to extend the Sheppard Subway. Although funding for this might somehow arrive from the private sector or through links to future property tax revenue, if the project is going to launch, a considerable portion will be in public sector budgets.
In this context, the new streetcars are an easy and obvious target especially as they are not loved by the Mayor’s office. The Star mentions a $1.5-billion shortfall in available capital over the next ten years. Whether stretching out or delaying spending on new streetcars will make a big dent in this is hard to say. A scheme for Metrolinx to pick up the cost and lease the cars back to the city is only an accounting trick — one way or another, we have to pay for them just as we will for anything purchased with borrowed money. (The proposed financing of Presto is a similar piece of sleight-of-hand.)
The fundamental problem is that the revenue stream (be it operating or capital) dedicated to transit in Toronto and in the GTA is far too small for the region’s demands. Queen’s Park refuses to address new “revenue tools” even though several analyses of the situation by such radical lefties as the Toronto Board of Trade flag the urgency of more spending on transit.
Once upon a time, we had a plan, no an announcement, called MoveOntario 2020. It had lots of goodies in it including a network of LRT lines in Toronto. That’s gone, replaced now by a single $8-billion project for an “LRT” subway across Eglinton and replacing the Scarborough RT. Planned improvements of GO included electrification of the Lake Shore corridor, but what we actually get are small scale extensions dribbling out one announcement at a time. Even as and when Metrolinx does produce its “Investment Strategy” with recommendations for revenue sources, along with “The Big Move 2.0”, the likelihood any government will have the stomach to raise new taxes is very low.
Meanwhile in Toronto, despite an $85-million hole in the TTC’s operating budget, Mayor Ford wants yet another freeze of transit fares. This is madness. Fare revenue totals about $1-billion and we know that the combination of strong riding demand and good service will minimize the negative effect of a fare hike. The TTC projects a 10% increase (to $2.75 per adult token, with other fares adjusted proportionately) would bring $50-60m, but this is conservative. It includes a considerable allowance for “elasticity”, the degree to which a price increase leads to a drop in demand.
Service cuts alone will not address that $85-million, and that approach would ignore both the overall growth in demand on the TTC and the close linkage between service quality and the system’s attractiveness. Moreover, the $85m does not include the $25-$30m cost of an arbitrated labour settlement TTC workers will likely receive.
While it is tempting to blame everything on Mayor Ford, this is a case where many others must share the burden. TTC financing has occupied a never-never land in Toronto and Ontario budgets for years. Toronto is badly served when an agency appears to have an unlimited appetite for money, but a financial plan consisting of “let’s hope for better next year”. The City is also badly served by doctrinaire budgeting that decrees funding and service cuts with no regard to their effect on system users, on the viability of an essential part of the City’s transportation network, and on the ability of Toronto to attract and serve its businesses and residents.
A 2012 TTC budget will probably show up on the agenda for the board meeting of September 20, although I suspect details will continue to leak out in coming weeks. How many decisions will be made behind closed doors before those budgets formally appear? What options will citizens or Council have to examine the details, to debate the options for the future of our transit system?
Instead of that debate, we have far too much focus on what we can do without, on what we can cut. That is not city building, and certainly is not city leadership.