What Mayor Ford Should Have Asked For

Wednesday, August 17, saw Rob Ford going up to Queen’s Park in a time-honoured Toronto tradition asking for money for the transit system.  I won’t go into much detail on this as you can (and already may have) read all about it in other media:

Marcus Gee in The Globe

Karen Howlett and Patrick White in The Globe

Daniel Dale in The Star (with a wonderful photo in which Ford appears to be channeling the subway gods)

Martin Cohn in The Star

Chris Selley in The Post

Natalie Alcoba in The Post

Mayor Ford’s dream of a subway paid for entirely by the private sector has evaporated.  Brother Doug Ford claimed on CBC’s Metro Morning in February that developers were just waiting to invest $5-billion in the line, but they’re not queuing up chequebooks in hand.  Desperation set in a few months back when even Ford’s hand-picked transit fixer, Gordon Chong, openly questioned the proposed financing.  Since then, any public sector funding that Ford could scrape together was thrown in the pot so that the private sector “ask” would drop by a billion or two.

Back in March, Mayor Ford signed an agreement with Queen’s Park (a document that has not yet been ratified by Council) in which Ontario takes over responsibility for an underground Eglinton line (at a cost of $8-billion or so, using up almost every penny of the Transit City money), and Toronto is on the hook for the Sheppard subway.  If there’s money left over on Eglinton, up to $650-million will be given by Ontario to Toronto.  Ford wants that money now, and fears that a Federal contribution of $330-million to the Sheppard LRT project will be lost if the Sheppard project doesn’t get on the rails soon.  He has also been after money from “PPP Canada”, a federal agency, but they’re a pesky bunch and want to see a business plan.

The Mayor came away from Queen’s Park empty handed, and Premier McGuinty made it quite clear that Ontario is in no position to advance funding for the City’s project until the true cost of the Eglinton line is known.

This has to be the biggest waste of a bilateral meeting in quite a long time.

What is Toronto’s big problem?  The operating budget going into 2012 and beyond.  What effect does the Sheppard Subway have on this budget?  Zero.  It’s a capital project, and the line doesn’t even have detailed engineering work completed, let alone any idea of how we will pay for it.

If Mayor Ford had some respect for Toronto taxpayers as he so often claims, we would work on proposals to improve the balance sheet on Toronto’s operating budget.  Ford’s Council is already on record asking that Queen’s Park return to funding half of the operating deficit, but this issue was not even on the table.

“Predictable funding” has been the rallying cry of transit advocates, politicians and management for decades.  It is impossible to make long range plans about service quality, major system maintenance works and expansion without knowing that money will be available, and that funding programs will meet the challenge of a robust, growing transit system.

On the Operating Budget, Ontario dropped out of that game under the Harris Tories, and came back, fitfully, under the Liberals with various one-time bailouts.  Gas tax revenues earmarked for Toronto are split between capital and operating with about $90-million going to operations, and the rest to capital.  To put this in context, the TTC’s total operating subsidy is over $400-million, and the provincial contribution is nowhere near half.

Back in 1990, the last year of the Peterson Liberal government, Ontario gave the TTC almost $101-million in operating subsidy.  Yes, more money, 21 years ago.  Toronto has been waiting a long time to see this type of funding return to our transit system.  In recent years, as special subsidies dried up, Toronto politicians complained that “transit spending” was out of control because the City’s subsidy portion grew so rapidly.  Part of this came from system growth — by 2011 the system will have gained almost 50% more riders than in had at the depth of its fall — part from extra costs of service improvements, and part from the cost of carrying riders on buses that have lower capacity than their predecessors.

Like Toronto, Queen’s Park faces the conundrum that actually supporting transit costs money because almost all new riders represent additional net costs.  Going “green”, giving riders better options for travel without the need for multi-car families, isn’t free.  Supporting the growth of employment in downtown Toronto through better regional transit isn’t free.  Attacking congestion on roads in the 905 with good, attractive local transit certainly won’t be free because the transit habit falls off north of Bloor Street, never mind the 401 or Steeles Avenue.

On August 18, Metro Morning asked each of the provincial parties what they would do for transit in Toronto.

Frank Klees from the Tories talked about a $35-billion infrastructure fund included in their platform saying that it had a lot for transportation and transit, but with very little specifics.  That’s not surprising considering that the platform actually does not commit the party to much of anything on this front.

Cheri DiNovo from the NDP focused on operating costs saying that her party would pay 50% of transit operating subsidies in return for a four-year freeze on fares.  Although her heart’s in the right place looking at service rather than megaprojects, the fare freeze is a hard sell for me.  With TTC fare revenue now at $1-billion annually, a four-year freeze would cost well over $100-million annually by the last year, and this would wipe out a good chunk of the added subsidy without providing any better service.

Kathleen Wynne, Minister of Transportation, talked about all of the money Queen’s Park has sent Toronto’s way, but she plays fast and loose with past, current and future dollars, local and regional projects, not to mention capital and operating budgets.  For example, the provincial contribution to the Spadina extension project, close to $1-billion, was expensed in 2006 and sits in a trust fund.  This was a one-time payment to soak up part of a surplus.  Payments for new subway cars and streetcars are welcome, but they come over many years especially for the streetcar project, and Queen’s Park has no money at all in either the new carhouse nor in the system’s reconstruction to accommodate the new fleet.

Ontario has money in the Union Station project, a log-overdue update of this facility, but that’s only the start of capital needs for GO Transit.

The Air Rail Link to Pearson is another Provincial “gift” to Toronto, but looked at relative to other projects, it’s small change and not a high priority.  Without the Pan Am Games, this would have vanished when the “private sector” scheme to build it fell apart.

Minister Wynne talks about the Gas Tax which yields $160-million annually for Toronto.  However, as I noted above, that’s only $70-million into capital and $90-million into operating, and this amount will not grow with inflation because it (and its federal counterpart) is a fixed cents-per-litre amount.  Only a big jump in fuel consumption, the exact opposite of current policy goals, would generate more revenue.

Meanwhile, other capital subsidy programs from Queen’s Park have wound down and future TTC capital projections show Ontario spending little more than $100-million annually. (See page 20 of the TTCs 2012 capital budget projection showing projected sources of revenue.  Note that this does not include the Spadina, Sheppard or Eglinton projects.)

Yes, Ontario will build us an $8-billion Eglinton line, but at the cost of other proposed Transit City services that will never see the light of day, at least while Mayor Ford is in office.  They may be sidelined even under a new Mayor because Queen’s Park will be busy paying the Ford premium for an underground Eglinton line.

What would I have asked for from Premier McGuinty?

  • Let’s pretend I believe in the Sheppard Subway.  I would start by having this project in far better shape as a business plan, with solid indications of how the private sector funding would actually work.  Only then would I turn to other governments to “top up” the project or to provide temporary financing until the developments that would pay back the cost came on stream.  I would prove that I can actually achieve what my campaign promised.
  • Council is already on record asking for better operating subsidies, and I would ask for a 50% Provincial contribution including a mechanism to index this to inflation and to system growth.
  • Fares must rise too, and there’s no point in soaking up new subsidies with fare freezes.  Just as Toronto creates headaches for itself with tax freezes and foregone revenue, the TTC is hurt by the absence of small, regular fare increases to cover, at least in part, its increasing costs.  Otherwise, we will have this whole debate again in four years.
  • On the capital side, Toronto’s transit system, especially its subway now facing major costs for renewal of its half-century old structures and systems, is a regional asset and benefit, and should be funded on that basis.  As with the operating budget, there must be a set amount of money available every year, including indexing, that could be included in TTC capital maintenance plans.
  • Only the major expansion projects which are the true one-time costs would still be funded on a “project” basis, and these must not compete with the funding to maintain what we already have.

Yes, that’s a lot to ask especially of a government that is running a deficit and facing an uncertain future, but it’s what we need.  Metrolinx is supposed to deliver an “Investment Strategy”, but it needs to look not just at a few GO extensions and busways, but to the needs of Toronto’s transit system and the systems that will grow around the GTA.

Will this require new “revenue tools”?  Certainly.  Politicians who fear to state the obvious may play to their base, to the something-for-nothing crowd for whom “gravy trains” are the simplistic answer to all our problems.  That’s not leadership, but pandering, and without even a modicum of real business sense about how city and regional finance work.

Back in 2007, we had “MoveOntario 2020”, but it didn’t take the government long to get very cold feet thanks to low-balled project estimates and an economy headed into recession.  The problems are still there, and frustration with congestion — be it overcrowded roads or subways, or buses that arrive infrequently and full — is even more pressing.

The job any Ontario government has is to sell that vision, the value of that investment.

The Mayor of Toronto needs to play his part in building a much-improved TTC system, not just one pet subway line.

50 thoughts on “What Mayor Ford Should Have Asked For

  1. Moaz Yusuf Ahmad said:

    “The more I read, the more I think that this is much more about politics & egos & legacies, rather than public transport policy, mobility & access.”

    That’s true. Unfortunately, we don’t have a working political feedback mechanism when it comes to transit. In theory, the voters should be able to elect politicians who take best care of their needs, including transit expansion which is ultimately in the public interest. In reality, many people vote for / against the agenda unrelated to transit, and then the transit policy depends on the personal tastes of those who got elected, and their advisers.

    The problem is exacerbated by the fact that a typical election cycle (4 years) is often too short to plan, design, and build a new transit line. Therefore, any project started by an elected official during his/ her term, is a potential cancellation target for the successor.

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  2. Steve comments

    “Stintz could be relegated to the margins fairly easily. For the TTC, it would be a disaster.”

    Why would it be a disaster? Just the principle of the thing? Marcus Gee keeps talking up Stintz, but I’m not sure his panegyrics are warranted. Is she truly the best possible chair of the Commission at this time?

    Steve: Stintz has been protecting Gary Webster, and more generally the TTC as an organization, from an ill-considered blood-bath to fill it with people who will love, or at least kowtow to, Rob Ford’s transit plans while dismantling the basic quality of service. She is not alone in this, but is the most visible face of that faction. (If she had no supporters among the other Commissioners, they could have replaced her as Chair months ago.)

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  3. Steve:

    Residents of the 905 would argue that they contribute to the TTC through provincial and federal taxation.

    Yes, but so do I here in the 416. The bottom line is that people living in the 416, when everything is taken into account, pay more to use the TTC than riders from the 905, and this is what has to change. Having said that, I agree that a better solution is to completely revamp the fare structure so that all local transit systems are treated as one unit, with a corresponding fare by distance or time. But I’m not holding my breath for that to happen. So in the interim, I would suggest that raising fares for non-416 residents is a far better solution than the inevitable service cuts that are bound to happen under Rob Ford unless we can reduce the operating budget subsidy.

    Steve: Aside from the administrative nightmare, you are not going to see selective increases for 905 residents. It is politically untenable before we even get into debates about “fairness”.

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  4. In addition to the other comments about Mallick’s article, she makes the bizzare assertion that the working poor are paying cash fare because they cannot afford to spend $25 at a time for tokens.

    While it may seem odd that someone who can scrape up $6 each day to get to and from work might not be able to purchase $25 of tokens once a week, I can sympathise with this. Leaving a twenty and a ten aside to pick up tokens, but then realizing that you’re out of milk and bread can find you with not enough to buy ten tokens (been there, done that, but it cost us $26 for ten YRT tickets!).

    That said, unlike many other GTHA transit agencies, the TTC does not make one purchase 10 tokens at a time, as they advertise 5 for $12.50. Added to that, token machines can sell you 4 for $10 and, as I brought up here in another thread, many subway collector booths will sell you 4 for $10.

    I certainly have a problem with someone scraping up $6 per day who finds they cannot scrape together $10 every second day. Mallick’s point just does not stand up.

    Steve: Yes, that business about buying 10 tokens at once comes up often. It has been possible to buy fewer than 10 at once for quite some time, and this suggests a writer who is out of touch with how the system actually works.

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  5. While I disagree with Mallick’s conclusion, I do feel she does a good job pointing out that the TTC seems to be operated sometimes like a business focused on short term gain, rather than as a public service as it should be. For example, the TTC doesn’t want to charge a competitive rate on passes (+-10 trips for weekly, +-40 for monthly) because it is concerned about the revenue it may lose. This ignores the fact that the majority of extra trips would be shorter than standard commute ones, and that if it does encourage people to take transit for more longer trips, then it is doing its job as a public service properly! Other examples include not providing debit/credit at TTC booths since they don’t want to give extra money to banks, restrictive transfers, floating the idea of charging for texts, etc.

    Obviously I’m not ignorant to the TTC’s finances, but I do think the balance is off between cost recovery and providing service. Just as we can’t have a subway underneath every suburban arterial, we can’t cut every bus or rail route because it is not profitable enough.

    Steve: TTC management have not helped in the analysis of finances and fare policies over the years because they focussed on “lost revenue” from any form of discount, and drilled that sensibility into the Commissioners. Oddly enough, things have evolved to the point where the benefit of passes — that they can be sold with a single, simple transaction thereby lowering the cost of doing business — are recognized. That happened just in time for us to have a Commission that has a fetish for cutting costs without looking at the service side of the equation.

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  6. Mapleson says:

    Building 1-2 km a year does not work. Creating in-fill stations on existing lines is relatively easy, but you need support apparatus at the end of a subway line (bus depot, parking, storage track). That’s ignoring inflation costs, where building today costs half as much as building in 2035.

    Actually building 1-2km a year can work, it doesn’t mean you open a station every year, it’s more the concept that your always building something. You have a team that determines a need for a line, another team does the basic design work, another team gets the paperwork through the system, another team deals with land acquisition, another one does the foundation work, another runs a TBM through, another puts in the track and base, another does the station building, there could be 5 years between the first and last teams.

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  7. Lampy (Mayor Allan Lamport) was ahead of his time. Decades ago he stated building a mile or two a year was the way to go. You keep engineers on staff full time rather than going out every time and hiring on a whole huge staff and train them how to build a line.

    Steve: The ongoing construction in Madrid has a similar basis even though some of it is in the private sector. By ensuring a steady flow of work, contractors can become expert in their fields, and knowing that there’s more to come can stage manage their crews better and bid lower. The flip side of the problem is that we have to agree in advance what the multi-year projects will look like and not allow changes to the plan every time there’s an election. We also have to actually spend the money, rather than endlessly announcing it.

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  8. Hi Steve:-

    So someone left the gravy train on the stove and the gravy all evaporated, eh!

    Well now all that we’re left with on that train is carload after carload of smoke and mirrors . Mirror, mirror on the train, whose the wisest mayor ever, eh?

    The mirrors may have some resale value to the condo builders for their new developments along the unbuilt subways’ corridors, thus realizing buckets of private sector funds to be applied to holes in the ground to nowhere.

    Dennis

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  9. Dennis Rankin wrote,

    “The mirrors may have some resale value to the condo builders for their new developments along the unbuilt subways’ corridors, thus realizing buckets of private sector funds to be applied to holes in the ground to nowhere.”

    Those holes in the ground to nowhere just may get filled in with the broken pieces of all those mirrors when they fall out of those condos! 😉

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  10. Steve: Actually, no. Most fares are paid at some form of concession level as simple as the discount for children or seniors, or a bulk-buy method using a pass. Over half of all adult trips are taken using passes today. In many systems around the world, the single fare (however it is purchased) is deliberately kept high to discourage its use.

    But as you have said, the TTC sees discounts as “lost revenue” – basically what I was trying to say.

    Steve: TTC management have not helped in the analysis of finances and fare policies over the years because they focussed on “lost revenue” from any form of discount, and drilled that sensibility into the Commissioners. Oddly enough, things have evolved to the point where the benefit of passes — that they can be sold with a single, simple transaction thereby lowering the cost of doing business — are recognized. That happened just in time for us to have a Commission that has a fetish for cutting costs without looking at the service side of the equation.

    Let’s hope their perceptions of fares (and their customers who pay them) will evolve further.

    Regards, Moaz

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