Board of Trade Advocates New Revenue For Transit

The Toronto Region Board of Trade has announced its support for new revenue streams that could fund the Metrolinx “Big Move” Investment Strategy and more.

Matt Elliott (aka @GraphicMatt) has produced a chart showing the contribution of each of four recommended sources and the range of possible incomes.

The Board of Trade has launched a new website under the name letsbreakthegridlock, and this includes a background paper on the evolution of their recommendations.

Most striking about the proposed revenues is that even the “low end” total is close to $3-billion per year with the high end over $4b.  The Board of Trade is not recommending specific levels for the new revenue stream, but the Toronto Region and Queen’s Park need to aim high.  The Metrolinx Big Move plan was priced at $2b/year, but that estimate is several years out of date and does not include inflation.  It also does not include any money for local transportation improvements that was recently announced as part of the “Next Wave”, and which would increase the total needs by one third.

This is not some wild-eyed, pinko-commie, downtown bunch of granola-eating, pot-smoking, tree hugging, tax-and-spend radicals — it’s the Board of Trade, and they claim wide support from their members.  Congestion and the lack of good transportation options within the GTHA are strangling business and making the region uncompetitive.  That’s the kind of effect businesses notice, and they recognize the effect of decades of disinvestment in the transportation network.

Three of the four proposed tools are easy to implement as extensions of existing tax regimes and they produce substantial revenue.

Regional Sales Tax

An additional 1% sales tax applied across the GTHA would generate $1.0-$1.6b annually.  Although there could be some boundary effects (businesses locating just outside of the tax region to lower their prices), the GTHA is a big place.  Given the scope of Metrolinx service territory that now reaches to Niagara Falls and Kitchener-Waterloo, the tax region could well be bigger than the formal “Greater Toronto and Hamilton Area”.

Parking Space Levy

A levy of $1.00 per day per parking space levied on non-residential parking would raise $1.2-$1.6b annually.  It is unclear how raising the cost of parking would benefit the transportation network, and a small increase per user is unlikely to push motorists over the edge onto transit, especially in areas built around car access to large parking lots.

This effectively becomes part of the cost of doing business for owners of malls, office blocks and industrial parks.

Regional Fuel Tax

A levy of $0.10 per litre would generate $640-840m per year.  To put this in context, there is already a five-cent tax at both the provincial and federal level that is directed to transit.  The new levy would effectively double the transportation-related tax on fuel.

The degree to which such a levy will influence behaviour is difficult to say.  Motorists are notoriously difficult to move out of their cars primarily because the alternatives are often unavailable or uncompetitive for their needs.

High Occupancy Tolls

A toll of $0.30 per vehicle kilometre would generate $25-$45m per year.  This toll would convert existing high occupancy (car sharing) lanes  to tolled lanes where anyone could pay for the privilege of driving in the (presumably) less crowded HOV lane.

Such a scheme is counter-productive.  Any changes to the road network should encourage increased utilization of the capacity provided, not offer those who can afford the option the ability to buy their way into a high occupancy lane.

In the background paper, we learn that this option was not even part of the mix originally studied by the Board of Trade, and it was a late addition to the recommended list (but with no real justification).

The background paper says the four recommended tools:

have the potential to act as the “heavy-lifters” of revenue collection [page 28]

This is simply not true of the HOT proposal.

I cannot help thinking someone in the Board just wouldn’t let this paper out the door without giving him (or her) the option of buying their way out of congestion.  This is pandering of the worst sort, and it devalues the Board’s report by its presence.

The Roads not Taken

Several potential revenue sources were studied but rejected [page 26]:

  • Road Tolls/Charges – $1.3b – 1.5b ($.10 per km)
  • Increased Income Tax – $640m-740m (0.5%)
  • Higher Property Taxes – $670m (5% increase)
  • Employer Payroll Tax – $630m – 730m (0.5%)

Income Tax is of particular interest because it is seen by many as a “progressive” tax that targets higher incomes more than low, while Sales Tax affects everyone.  The Board observes:

Increased Income Tax: The potential for economically negative impacts for the Region, such as smaller businesses moving out of Region and disruptions in local capital markets, given tax could cover income derived from investments.

This is a rather self-serving remark coming from a group with obvious interests in the business community.  The obvious rejoinder would simply be to increase taxes across the province (and possibly remove some existing exemptions).  Benefits from public spending will obviously flow to the same investors who might plan a flight to tax havens like North Bay or Winnipeg.

Other Financial Sources

To its credit, the Board accepts that the problem is of raising new revenue, and that spending cuts or “efficiencies” will simply not provide the needed capital.

Given the current fiscal state of all levels of government, bridging this funding gap will require new and dedicated funding streams. To suggest there are opportunities to find $34 billion from within the existing provincial and municipal funding envelope by reducing waste or finding efficiencies is simply not realistic. As the Drummond Report highlighted, for the provincial government to just meet its projections of annualized 1.4% increases in spending up to 2017 and balance its budget, it must reduce spending by $30.2 billion.  [page 20]

At the municipal level, they also observe:

there is a decreasing ability for development charges to mitigate the costs of capital as build-out and intensification plateau over time across the Toronto Region.  [page 20]

This has been echoed in material from consultations by Toronto and Metrolinx where the dollar value of development charges is tiny compared to the level of sustained spending required for regional plans.  Moreover, the development industry is notoriously unhappy about anything that adds to the cost of new housing units, especially as that market begins to soften.

Public-Private Partnerships come in for a review with the hope that by transferring some project risk to a private partner, performance will improve and projects will not be saddled with cost creep as this would penalize the partner.  However, the Board rightly notes:

However, it must be stressed that they [P3’s] are not new revenue streams. In many respects they are akin to a mortgage; you shop around for the best rate and get savings, but in the end, you still have to pay the interest charges and principal.  [page 21]

Metrolinx has recognized the limits of private investment, and on the Eglinton project expects that only about one third of the total financing will come from private partners.  The rest will be traditional public funding from general revenues and/or public debt.

Tax Increment Financing (TIF) and Special Property Taxes also get passing mention, but mainly in the municipal financing context.  There are two important distinctions here.

First, as the Board observes,

However, because of their location based bias (i.e. major urban centre redevelopment projects) they would not cover the entire costs of large cross region transit projects.  [page 22]

By their very nature, these taxes assume a direct link between new construction and benefits nearby of increased land values.  This is easy to demonstrate for cases where governments invest in a reclamation scheme for run-down neighbourhoods (Toronto’s waterfront infrastructure would be a good example where the investment and benefit are side-by-side), but much harder for a regional network.  A “Downtown Relief Line” has benefits scattered throughout the transit network and region, but assigning any of them to specific properties would not be possible.  This is a cost that must be borne generally because that is the scope of the benefit.

Another important issue not mentioned by the Board is that redevelopment schemes have a bad habit of not producing the expected economic activity and benefits.  Just because you build a subway terminal, buildings don’t sprout overnight beside it.  A public investment may take decades to bear fruit.

Transit Fares

The Board does not view fare revenue as an appropriate tool for capital projects, but rather that this stream should support better service.

[T]he Board believes it is more appropriate that this funding stream be directed towards covering operating costs and service enhancements like more frequent GO train service on what is still underutilized rail infrastructure within the Region of Toronto.  [page 23]

To put things in context, the total TTC fare revenue is roughly $1b annually on a budget of about $1.5b.  A very substantial fare hike would be needed to generate substantial revenue ($200m annually would require at least 20% higher fares, a jump proportionally much greater than in any of the other proposed revenue tools).

Farebox revenue from other systems in the GTHA is trivially small with the largest share coming from GO Transit (about $325m in the 2011/12 budget).  Huge fare increases would be needed to generate substantial additional revenues to support capital works.

Where Do We Go From Here?

For months, the Toronto Region Board of Trade has been hinting quite broadly that it would come out in favour of new revenue tools and a substantial revenue steam to fund investment in the GTHA’s transportation network.  This is an  important step as it shows support from the business community, not just from the “usual suspects” advocating more spending on transit.

With this announcement, the Board has clearly dismissed the view that we can have everything we need and want without paying for it, a view held by “conservatives” of whatever ilk that has hamstrung calls for more public spending in many portfolios.

Now we need a provincial government with the will to embrace and advance a program of transit investment.  In a future article, I will turn to the Metrolinx “Investment Strategy”.

51 thoughts on “Board of Trade Advocates New Revenue For Transit

  1. The Board’s initiative is to be applauded. My two cents:

    The regional sales tax is only reasonable if it’s a province-wide add-on to the existing HST and allocated regionally per capita; indeed I would make it a full 1% and use it for infrastructure generally: roads, transit, watermains, sewers, bridges etc. It all needs major investment.
    The parking tax is only reasonable if it is on paid parking stalls, i.e. not on free parking lots; to ask property owners to install collection systems on currently free parking lots is asking too much and there are lots of paid parking stalls (and fewer and fewer free lots). With that caveat, it’s a good revenue tool and aligns with objective of making is more expensive to drive (and thereby relatively more attractive to take transit).
    The regional gas tax is dead on arrival; people HATE gas taxes already, it has nebulous effect on behaviour, and it will have serious impact on gas bars within the affected zone. People will buy simply adjust and buy their gas outside the zone, which also means the potential revenue is easily overstated. This one has too much nuisance value.
    The HOT lanes are the weakest idea and deserve little comment; they raise an inconsequential amount of money and encourage single drivers to sail on through, exactly what we don’t need.

    The glaring omission in my opinion is road tolls on the 400 series highways and the Gardiner & DVP. The beauty of road tolls is they affect behaviour — people will be encouraged to use transit, or share the ride, or work from home, or do whatever it takes not to drive long distances on a daily basis. Somehow an urban legend has emerged that road tolls would be difficult/impossible/expensive to implement. Nonsense. On controlled access highways, as on the 407, all that is required is the equipment to monitor vehicles entering and exiting, and the infrastructure to bill accordingly. A major money maker and a fee that genuinely aligns with desired behavioural changes.

    My only other quibble is that development levies around stations can and should be part of the equation, in combination with development incentives and prescribed zoning to encourage density in the vicinity of new or existing rapid transit stations. Significant amounts could be raised via this method relative to the cost of each station.

    All in all, kudos to the Toronto Region Board of Trade for being in the vanguard on this vital issue for some time now.

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  2. Steve: Regional Fuel Tax

    A levy of $0.10 per litre would generate $640-840m per year. To put this in context, there is already a five-cent tax at both the provincial and federal level that is directed to transit. The new levy would effectively double the transportation-related tax on fuel.

    Steve, how does this 5c/L factor in? Is it a separate 5c/L from the Province AND the Feds or 5c total?

    According to the stickers at fuel pumps, drivers currently pay 10c/L in Federal Excise Tax (I’m not sure if this is the same as the surtax introduced by Finance Minister Paul Martin almost 20 years ago to pay down the deficit) as well as a 14.7c/L Ontario Road Tax and HST.

    Sadly, I do not know if the HST is collected on the cost of fuel only or on the cost of fuel plus 24.7c of taxes per litre.

    It’s actually sad that I, along with millions of others, simply pay without knowing.

    Steve: Of the total take of gas taxes at both levels, five cents from each goes to transit. However, the allocation formula is different for the feds and for Ontario, and in Toronto, the provincial money is split partly to the operating budget.

    Steve said: High Occupancy Tolls

    A toll of $0.30 per vehicle kilometre would generate $25-$45m per year. This toll would convert existing high occupancy (car sharing) lanes to tolled lanes where anyone could pay for the privilege of driving in the (presumably) less crowded HOV lane.

    Such a scheme is counter-productive. Any changes to the road network should encourage increased utilization of the capacity provided, not offer those who can afford the option the ability to buy their way into a high occupancy lane.

    I was really surprised to read of this pointless proposal and have already tweeted my surprise and objections @TorontoRBOT and will be following up with letters to various people.

    The last thing we need to do right now is to dilute the (limited) effectiveness of the HOV lanes we already have. This HOT proposal as designed will discourage HOV growth and cost a lot of money too … and the toll revenues are a fraction of what other revenue tools would bring in.

    Steve: A related problem is that we could see all sorts of highway expansion projects under the guise of creating HOV/HOT lanes.

    Steve said:

    In the background paper, we learn that this option was not even part of the mix originally studied by the Board of Trade, and it was a late addition to the recommended list (but with no real justification).

    I cannot help thinking someone in the Board just wouldn’t let this paper out the door without giving him (or her) the option of buying their way out of congestion. This is pandering of the worst sort, and it devalues the Board’s report by its presence.

    I fully agree that this HOT proposal is not well thought out. Frankly it almost seems like it was designed not to work (30c/km on limited HOV lanes).

    I personally think that if HOT is going to be considered we should first expand the HOV network by making all existing express lanes (on the 401, 403, 404, 427 and Gardiner) into HOV, adding HOV lanes to the 410, and converting the left 2 lanes of the 400 into HOV … and complementing those HOV lanes with expanded GO and municipal bus services.

    With a complete HOV network in place then we can look at the HOT option. That HOT revenue can also be applied directly to municipal transit operating costs, part of the 25% of the Big Move we know so little about.

    It almost scares me when I feel my “HOV then HOT” proposal is more “well thought out” than the one coming from the Toronto (and Region) Board of Trade.

    Cheers, Moaz

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  3. The parking space levy option is the only one I like of the four they cite. Electronic tolling is riddled with errors (see HWY 407) and has high collection costs (1/3 of revenues ie eaten up by electronic toll collection). Sales taxes are regressive in nature.

    Gasoline taxes address pollution. But not traffic congestion specifically. Sure you burn more gas per km (poorer mileage) when you have traffic congestion. But you are burning lots of gas when you drive 100+ km/h on a non-congested expressway. If Guy A spends 5 mins driving on local roads at 50-70 km/h and 35 mins driving 120 km/h on HWY 401 on a non-congested Saturday afternoon and Guy B drives 40 mins in congested rush hour traffic, Guy A may have better mileage (the gas he consumes takes him further per gallon) but he’s still burning a heck of a lot more gas than Guy B. Your engine burns a lot of gas when you are driving 100+ km/h. Why should Guy A be penalized a lot more (since he burns a lot more gas and gasoline is being taxed) than Guy B in the name of “managing traffic congestion” when in fact it is Guy B who is contributing to traffic problems and not Guy A, who is driving on a free-flowing freeway in a non-peak period?

    Charging for parking seems more logical. If people don’t have a place to park their car cheaply, this discourages them from using their car in favour of available public transit. This in effect reduces traffic congestion. And it makes it easier for motorists willing to pay a premium for parking to get a good parking spot downtown and other congested areas. There are always going to be diehard suburbanite motorists who will drive in downtown Toronto no matter what. But there are plenty of motorists I know (including myself) who do alter their driving habits if parking is expensive and traffic is fairly congested. I often drive to the TTC park n ride lot at Islington station and pay $2/evening or nothing on weekends/holidays for parking and then take the TTC from there to avoid paying for costly parking downtown. Not the most glamourous option. But it’s not like taking an hour+ to drive to downtown Toronto and having to pay for parking and burn all that gas is all that glamourous either. Most of my Mississauga peers do not even “do downtown” unless it’s an Air Canada Centre concert or something because it’s too congested and they don’t want to pay for parking.

    Steve: I am not convinced that $1/day/space is going to make any difference to parking behaviour as it is too small an increment to represent a real disincentive for someone who is already paying to operate an automobile.

    Fuel taxes as you point out have unintended consequences depending on the type of trip one is making and the burden does not fall evenly. Also, other jurisdictions are finding that the pot of gold isn’t quite as full or rich as they expected due to falling consumption with improved fuel efficiency and changes in travel habits.

    Finally, as to the folks from Mississauga who won’t drive downtown, I’m going to say something that will sound like a cynical downtown resident. Toronto is not exactly going broke for lack of their trade, and we have an increasing population living in the city. Yes, it would be nice to have more visitors from “out of town”, but we shouldn’t tear our streets apart providing capacity for them. Even if the roads were uncongested, the parking spaces are vanishing under condos, and it will always be expensive to park downtown whether the road system is free flowing or not. This affects city folks too. The challenge is to get regional travel to a point where more people can easily get into and out of the core by transit, and not just to Union Station.

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  4. The Board of Trade spokesperson was just on CBC and confirmed that the HOV proposal would not charge vehicles with more than x passengers, only allow those with fewer to use them, at a cost. If the price for these “extra” users was adjusted as necessary to ensure the HOV lanes still moved (much) faster than the “regular” lanes I really see no problem with it. (Though wonder if the cost of setting it up would be worth the expected revenue.)

    Steve: It seems like a rather complex way of getting a small amount of revenue, and has a serious equity problem in that it encourages those who can afford it to “buy” their way onto a faster trip. This does nothing to address regional travel capacity problems. Given the way that this scheme is clearly an add-on to the Board’s proposal, I cannot help feeling someone on the BOT just cannot do without the ability to buy their way to drive solo on those lanes. My question to the BOT is quite simple: how did this low-value proposal get added at the last minute to the mix, and why is it included in a list of “heavy lifters” for revenue generation when it clearly isn’t one.

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  5. Parking levy and changing behaviour: ideally what happens is this

    Parking requirements are tied to mode share
    Landowner encourages people to use transit
    More transit usage = less parking needed
    Landowner replaces parking with something more profitable.

    So you get the twin benefits of greater transit share and greater density. (And greater profits for landowners, and more employment …). However, this only works if the first step is in place.

    Steve: To which I would add that the levy must make a real difference to motorists and encourage change, not simply be a nuisance fee.

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  6. Once again, they skirt the real issue IMHO. Gouge the stupid motorist at all costs of course, don’t build new roads or repair existing ones, rather charge an extra buck to take your car to work or to the mall.

    The regional tax has to be fair, so why not make it. Add the 1% to the HST, province-wide. Spread this 1% surtax around to everybody’s transit systems, not just us selfish folk here in T.O.

    HOV lanes are silly and unenforceable. They have a hard time as it is hooking single drivers in the Eglinton RH lanes for example. I’ve never seen a car pulled over for this infraction.

    I think this Board of Trade has no backbone. Just like dogs in the beach, no politician, not even Queen Bussin or Miller would ever take on the roaming free dog issue in the beach … why? because it would be political suicide.

    Steve: For the benefit of readers, Sandra Bussin was formerly the Councillor for the ward including the Beach. I am not sure that her replacement, Mary-Margaret McMahon, would have any more political spine on this than her predecessor.

    Why don’t we just toll the entire Parkway, Gardiner etc. Pick from wherever to wherever. You want to use it, then you pay. You do not want to pay, don’t drive on them … pretty simple to me. Nothing wrong with London UK’s example. Toll and an extra fee to get into downtown. The buses will have to pay the toll as well, so you’ll have to have the passengers pay a little more for the fare to cover it.

    It’s a lot fairer than penalizing motorists at the gas pump, or people that need or choose to drive to work or the mall. You feel like driving to the mall … then drive, you feel like taking a bus … then do so. Car owners are not doing anything wrong by driving. Quit making them out to be your enemy.

    It’s also time to quit blaming Harris. Harris is SO, SO many years ago. Seems to me McGuinty had an awful lot of years to improve or fix what Harris did to our transit, and yet McGuinty and the Libs chose to do nothing to fix it, nothing at all really, and we kept electing them anyways. Maybe this is a good step for T.O. but try changing the Provincial mindset, whoever is in power.

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  7. The Toronto Board of Trade are, on the most part, business people. Business people who recommend revenue tools or taxes to help get us better public transit for the benefit of all of us, not just a few.

    Just wondering, are the Ford brothers members of the Board of Trade? Sure doesn’t look like they have had hand in producing any of the recommendations, does it? Maybe too busy coaching or going to court.

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  8. I – like a few others – like most of what has come out.

    1) Regional Sales Tax – Yes, absolutely. Does not discriminate. Either we are all in it together or we aren’t. Easy to collect due to existing mechanisms. A no-brainer.

    2) Fuel Tax – again….yes. Sort of a “hidden” tax because people don’t see it. Most people probably aren’t even aware that they are being taxed at the pumps now. Out of sight, out of mind. It’s not like getting an ETR/407 bill in the mail. People will look up, see the price on the sign and hand over the money. And it also has teeth.

    3) Parking Space Levy – Yes. Doesn’t break the bank but adds up quickly.

    4) High Occupancy Tolls – No. Pointless. How on earth did this get through the filter? The little revenue it does generate is offset by costs of processing.

    Overall 3 out of 4 is pretty good. And I just have to say how delighted I am that road tolls are a non-starter. As you have noted Steve, not everyone is like Mayor Ford. Some may be addicted to their car and will refuse transit all the time but for the vast majority, it’s not their dream to drive a 12 year old car and sit in traffic on the DVP every day. And they certainly shouldn’t be punished with road tolls for not being able to afford to live near their job.

    I used to live up at Keele and Steeles when going to York and I know the reason they did it was they did not have any reasonable transit options and that taking a car was their only option because it gave them the quickest, most realistic way to get to work and get back to their families in under 3 hours.

    Until the day comes where we have true rapid transit options (subway, LRT, BRT) across the city, then I hope that road tolls will remain a last resort and not a first option!

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  9. And here in the comments we see the problem every revenue tool discussion faces:

    Comment n: I support [a], but not [b,c,d] for this list of reasons.
    Comment n+1: I support [b], but not [a,c,d] for this list of reasons.
    Comment n+2: I support [c], but not [a,b,d] for this list of reasons.
    Comment n+3: I support [d], but not [a,b,c] for this list of reasons.

    …never mind the “oh also it should pay for [sewers, highways, ponies, spaceships, …]”.

    We will all have reasons to support one and not another. Time to settle down and accept that to get the infrastructure we need, we all have to pay, and there is no perfect solution that will work for everyone.

    Steve: I am holding out for a unicorn.

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  10. Most of the revenue generators target motorists. Transit users must also pay their share as well. Yes, it can be argued that motorists are subsidized on many levels, but roads and highways do benefit every one. The National Interstate and Defense Highways Act of 1956 specifically pointed out that if a foreign power invades, military convoys would use this system for troop movements. Let’s not forget that NATO aircraft may also use highways for takeoffs and landings. I do not like this us versus them mentality. A government’s job is to unite the population not to divide them.

    Steve: Well, that’s providing the roads and bridges have not fallen apart yet from lack of maintenance.

    Revenue tools must be simple to administer. A regional income tax can be partially dodged by charitable contributions and other deductions. Do we ask all the retailers in the region to reprogram their POS terminals and their POS software just for a tax? We do not want to create any bureaucracy to collect this new revenue. Whatever revenues collected should not have 30% taken out of it for administration.

    Steve: Taxes are changed from time to time (just look at the GST/HST conversion), and the implications of getting rid of the penny. The world will not end if we have to change the tax rate for part or all of Ontario. This is a one-time cost for an ongoing revenue stream.

    If motorists wants more lanes on a highway or new highways, let tolls pay for it. By the time, the highway construction cost is paid off, it will be just in time for its replacement. So the tolls would be forever, but why stop someone from paying it if they are willing? Same thing with transit improvements, a surcharge should be paid.

    What we need right now is for the government to create an entity with the ability to borrow. With a 10 year US Treasury at a yield of about 2%, borrowing has never been cheaper. This entity must use revenues and surcharges to discharge the debt. Even in China, the Ministry of Railways uses the same methods to build their high speed train network. The Shinkansen network was built with debt taken on by the Japan National Railways.

    Steve: Part of our current mess comes from the provincial and municipal fear of debt. The whole problem, of course, is that we always talked about new debt but not new revenue to pay it down. Every politician was too busy cutting taxes to talk about that, and we have lost at least a decade’s investment thanks to this willful blindness.

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  11. I just can’t see this plan working if it involves the province. Ontario is facing a $30 billion deficit by 2017. As a result I think that most if not all of the funding raised by the province will likely just go into general revenue in order to try and balance the books.

    Toronto’s biggest transit mistake has always been in depending on the province/feds to provide funding. At best, they interfere with the project (like the Scarborough RT). At worst they just flat out cancel it later down the road. Toronto has to start generating the revenue needed without provincial support.

    I think the best option would be for Toronto to raise road tolls, particularly on the Gardiner and the DVP.

    I also think that a casino might help if the hosting fees were dedicated to transit. And yes, I am fully aware that gambling is a problem, a social ill, a menace to society etc etc. However, we sell alcohol and tobacco without giving it a second thought, so I find those arguments rather silly. Not to mention all the lottery and scratch and win tickets sold every day. The OLG estimated the hosting fees to be around $50-$100 million, which, if put into transit expansion, could help quite a bit. Just something to consider.

    Steve: I was wondering when the casino issue would surface here. First off, that $50-100m figure is pure fantasy that depends on a strong market uptake of a new casino and on an enriched formula for Toronto that has already been attacked by other cities and rejected by Queen’s Park. OLG is out on a limb trying to buy off Toronto Council without support from Queen’s Park. If this were an ordinary government department, several people would already be seeking alternate employment.

    Most importantly, even if a casino could bring in $100m, that’s a tiny fraction of what is needed to fund the current backlog of TTC spending, never mind growth.

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  12. I think the problem here is that we’ve dug ourselves into a hole so deep it’s almost impossible to get out now. No matter which revenue tool we choose, those who end up paying will not see any benefit, because the system will take an entire generation to build. By that time, Steve and I will be dead, and the rest of you guys will be old farts! Seriously, this is what politicians and taxpayers are secretly thinking — where is the motivation for building and paying for something that we won’t be able to use in our working lifetimes?

    In all this discussion, it’s ironic that nobody ever talks about curbing population growth in the GTA (which is the real problem), diverting it elsewhere through policy, or slapping hefty taxes on new cars at the dealership. We are treating the symptom, not the problem. As long as the GTA continues to grow at the current rate, Toronto will eventually implode transit-wise. Spending billions to not make congestion any worse is a very hard sell. That’s paying something for nothing.

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  13. I think ‘Casino’ is irrelevant. We already have a provincial ‘casino’ that people are horribly addicted to and already they line up for hours spending fortunes they don’t have. We call it Max or 649. Nothing could be more addictive than this. People are spending their food and rent money on the ‘millionaire-dream’.

    The OLG’s take rivals that of a Vegas casino so why don’t they open their purse strings a bit and do some transit funding? I know they build some arenas and so on but why don’t they fund some transit?

    Steve: The total revenue to the province from OLG is about $2b/year. If some of this is redirected to transit, the revenue must be made up elsewhere. Nothing gets around the fact that a major transit construction plan requires net new revenue, not reallocation of existing funds.

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  14. Interesting the comments about how HOT lanes won’t work technology-wise when Ontario was one of the pioneers of some of the technology that can make them work with the 407. Here in Seattle we have HOT lanes that are photo enforced with some technology similar to how the 407 works. I’m not sure if the cameras are good enough to try and detect if you really have a second person with you (or if a mannequin would trick it). Additionally the lanes are double striped and there are laws making it illegal to cross without a fine. Additional police enforcement completes the picture.

    Now whether it’s actually worth it or not is a different question, and I agree probably not.

    Generally here funding increases have been coming from specific sales tax increases (usually voted in via initative or proposition) for capital expenditures. “Car-tab” fees (i.e. similar to the vehicle registration tax) for some operational funding boosts also generally voted in via referanda. MVETs (motor vehicle excise taxes) on car purchases. LIDs (Local Improvement Districts) where a zone is given a special overlay for a property tax levy when an improvement primarily locally benefits that area, such as one of the streetcars we recently built. And then the other usual suspects of general revenue.

    I do wonder how the votes would turn out if Torontonians had more of the direct democracy input that exists over here. It often seems over-complicated and a pain, but presuming people are smart enough to vote correctly … it usually makes it much harder for a Ford to come in later and ruin things.

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  15. On casinos, I don’t want one in Toronto based on numbers drawn out of someone’s imagination but I’m not against one either as it will not impact my life directly.

    While the MGM at least looks at a way to make something out of the CNE grounds and Ontario Place … I don’t think we need a downtown casino in order to make Toronto better.

    Personally I’d put the casino at Woodbine and ask the casino builder to pay for an extension of the Finch West LRT line from Humber College down to Pearson with a stop at Woodbine, along with a station on the GO line. Call it the Woodbine Entertainment District or the Casino District.

    As for the social issues why not consider what Singapore did when they they approved casinos … they required them to be multiple destination “Integrated Resorts”, put them outside the Downtown area (at Marina Bay and Sentosa Island, and charged Singaporeans and permanent residents an annual fee if they wish to enter casinos … I think the amount is SGD 100 … and that money goes to social services and gambling help.

    It’s probably best if we try to keep the casinos and transit separate at least in the sense that casino revenues (like the TRBOT’s HOT proposal) will do very little for public transit.

    Cheers, Moaz

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  16. Really ironic how none of the proposals really impact the businesses (no increased commercial taxes or deferring corporate tax cuts).

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  17. Joshua said:

    “However, we sell alcohol and tobacco without giving it a second thought, so I find those arguments rather silly.”

    I would support taxing alcohol and tobacco because these problems already exist. By taxing existing sins without increasing their supply, we are not introducing net additional problems.

    Casino advocate’s proposal to open new casinos is different, because opening casinos is adding new social problems (as you acknowledge). It’s just like increasing the supply of tobacco and alcohol just to increase tax revenues.

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  18. @Steve
    Maybe $1/day/parking spot won’t do it. But I think most motorists have their “price”. Provided that you offer an attractive public transit alternative funded by the revenue collected from the levies.

    M. Briganti hit the nail on the head. We are managing a symptom of a greater problem (though I don’t believe in slapping hefty taxes on cars at dealerships0. There’s nothing wrong with owning a car. It’s how you use it. Driving downtown during rush-hour is anti-social. Taking the Gardiner Expressway on a Sunday morning, not so much. This is why the parking levy is a good idea. Slap heavy parking levies on downtown parking especially. There are alternatives for getting downtown. Like parking at a TTC park n ride for a relatively cheap fee and taking the TTC or parking at a GO station for free and taking the GO). The segregation between residential zoning and commercial/industrial zoning is the real culprit for all this mess and that real change can’t come about until you shift to mix-use development. In Paris, something like 61% of people walk (not transit, not cycling, WALK) to work. That is unreal.

    I think the GTA can work through this. Mississauga has gone from bedroom community to a city that has more jobs than workers living in the city. Aside from the City Centre, Mississauga still has a very much residential vs. commercial/industrial zone divide. But I bet a community like Milton has a higher population to job ratio than Mississauga. Mississauga has learned to become self-reliant. I think if more 905 communities followed their lead and stopped focusing so much on building little boxes on the hillside and sending them to work in Toronto and Mississauga, we probably won’t even need a “Big Move”. Something like over 3,000 workers in Stouffville take the GO to Union every day. Wtf? Why can’t they just build offices in Stouffville? Something for the Board of Trade Advocates to think about.

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  19. The additional advantage of road tolls, which no other revenue tool has, is that it can be targeted specifically at rush hour congestion by way of variable pricing. Charge more during peak times and reduce the rate over the balance of the day. This has the potential to redistribute traffic from peak times and maximize the use of the existing highway system.

    A MUST if road tolls are implemented would be an immediate and parallel expansion of GO bus routes along every highway tolled, connected into local transit systems.

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  20. I think the BOT intends to implement the parking tax similar to a property tax. The property owner would pay it and (subject to zoning and licensing regulations) could choose whether to pass the cost on to the users.

    Steve: Yes, the property tax system would simply consider parking as another type of land use with its own tax rate.

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  21. I just heard the leader of the Provincial NPD interviewed on CBC Toronto’s Metro Morning rejected the board’s proposed revenue tools and pointing to another source, namely corporate taxes by eliminating tax loopholes, citing that this could account for much of the money needed to build transit. On the other side of the argument (namely from the PCs and from our Mayor) is that the money is likely already there and only if more is needed should the revenue tools suggested be looked at. Quite frankly I find both arguments to be stalling tactics. Whatever we decide to do, we must have steady, predictable funding, and more importantly a long term plan not subject to the whims of whichever politicians are in power.

    Alas, we’ve spent the past 60 years building our suburban sprawl that is difficult if not impossible to properly service with mass transit, so whatever we collectively decide to do, it’s going to take a few decades for things to improve, provided we don’t continue to dither.

    Phil

    Steve: The problem with those loopholes can be found if you read the details in the NDP policy papers. First, the “loophole” is a corporate tax cut that the NDP would gradually eliminate. Second, they have already incorporated that revenue into their overall budget policy which does NOT include substantial spending on transit capital projects. On Twitter this morning, Horwath also invoked the same funding source for job training programs. She is counting the money more than once.

    I agree that the BOT was rather obvious in avoiding taxes that would affect the business community, but the NDP is being dishonest in pretending that the corporate taxes are a completely alternative source of the same revenue.

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  22. Any idea why congestion charge was not considered or discarded?

    Steve: There is no mention of it in the background paper. However, the problem of congestion is region-wide and actually downtown is comparatively free of commuting traffic. The transit mode share is already quite high, and we are seeing growth in cycling and pedestrian trips. Why tax the core when it is already behaving the way we want it to?

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  23. I don’t know where to ask this question so I will do it here. Pape Stn was originally planned to have a new exit/elevator into the newly redesigned platform/street-level area. I believe there was also a plan to build a new exit on the western end of platform to exit to street (only) on the west side of Pape where that public parking is. What happened to that exit? Why was it never constructed?

    Steve: The new second exit is at the east end of the station. If there was ever a proposed west exit, it was dropped from the plans a very long time ago, and it does not appear in any of the early drawings of the revised station I have seen. As for the existing (rebuilt) exit and platforms, yes, elevators are included.

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  24. @Steve

    You raise a valid point in that the OLG figure may be over-inflated. However, there is also the possibility that the opposite is true — they may be deliberately low-balling the figures in order to ensure they receive the maximum amount of revenue possible.

    If the OLG figures are accurate, I find it surprising that you are willing to dismiss $50-$100 million out of hand. It’s the roughly the same amount that a kilometre of LRT construction costs, right?

    Steve: It’s not a question of “may be” overinflated. The number is considerably higher than what Toronto would receive based on the formula applied in other Ontario cities, and the Premier has already stated that Toronto won’t get a special enhanced formula. Yes, it’s a “new” $100m, but at what cost to the city for transportation and social demands, not to mention redirected spending from other sectors. And worst of all, it is from a revenue source that is notoriously inequitable in that it’s a “tax” on those least able to afford it.

    @Mikey

    Every new place which opens and decides to sell alcohol and/or tobacco increases the local supply, so I don’t see where you are going with this. Unless you are suggesting that we should place a total ban on new liquor and alcohol licenses?

    I’m not suggesting that we build a casino no matter what, but I felt that the issue should be at least be discussed.

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  25. Personally I find it worrisome when politics interfere with sound public policy. My personal opinion is a 2%-3% increase in the HST (in line with historic norms) across the province. The revenue generated can be invested in tools that will drive competitiveness and prosperity and once the investments are complete, personal and corporate taxes can be lowered to make the tax increase revenue neural.

    A HST increase will:

    1) Raise more than the required revenue, producing respectively fewest negative externalities
    2) Effectively act as carbon tax (good for the environment)
    3) Have a comparatively small negative effect on business activity, and a positive effect when it is ultimately balanced with the reduction in corporate tax
    4) Have a positive effect on personal finances when it is ultimately balanced with a personal tax cut
    5) Discourage negative behaviors like overconsumption and encourage positive behaviors like investment. Society will be healthier and more prosperous for it.
    6) Avoid tax policy that can be circumvented with costly negative behaviors.
    7) Provide a simple direct tool that the public can understand, and allow policy makers to provide a clear transparent narrative to the public to build consensus around a clear easily understood policy plan.

    My suggestion would be to keep taxation clear and simple, and avoid policies that create bad behavior. Once the revenue is generated invest it in a way that vigorously pursues three things: competitiveness, productivity, and equality of opportunity. I can not stress the importance of competitiveness, productivity, and equality of opportunity enough. Raising taxes is never popular, but if the public sees that these three virtues are central to the government’s investment strategy the probability of success is significantly increased.

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  26. I didn’t read all the comments so I may have missed this, but I don’t really understand all the hate directed at HOT lanes. I live in LA and HOT lanes have been used to great effect in southern California.

    Now, its not entirely clear from the BoT proposal exactly how the HOT lanes would work, but if they followed a similar model to what is used out here they are a great option. I agree, the amount of money they raise is not significant (although if the network expanded this could certainly change) but that doesn’t mean they don’t have a purpose.

    There has been a bunch of work out of Berkeley showing that a lot of the HOV lanes in California actually create more congestion due to under-utilization (this could change over time) as people’s commuting patterns are just not conducive to carpooling right now. While this behaviour is obviously something that should be encouraged, the lanes are creating more congestion. I don’t know what the numbers on the lanes in Toronto are, but I wouldn’t be surprised if it was similar.

    What’s the harm in allowing people to pay to use HOV lanes, if implemented properly carpoolers should still be allowed in for free (as would electric vehicles etc…). Whats silly about this proposal is the flat rate. The rate should be set to optimize traffic flow and should change during peak periods similar to SR 91 in California.

    Personally, I think that calling HOT lanes counter productive is unfair (or at least you owe a better explanation, HOV lanes do not use capacity efficiently right now and HOT lanes would certainly be more efficient). Pricing roads is one of the best ways to address congestion and HOT lanes are one of the fairest options as it still allows those who can’t afford to pay an alternative whereas a flat congestion toll does not. It also helps moderate demand. I think its a fairly agreed upon fact that when it comes to highways you can’t simply build your way out of congestion and although HOV lanes are great in theory, there aren’t enough people with the flexibility to commute together yet to make them efficient.

    Steve: The foremost issue is that compared to other proposed tools, they would collect only a few percent of the amount of revenue, and they are mistakenly included among the “heavy lifters” as potential tools. There is only so much road space to go around, and I would not be the least surprised to see proposals to widen highways with the justification that it was for a HOT lane. Meanwhile we have other revenue tools that require no new infrastructure to implement and would bring in a lot more money.

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  27. Alright, so no to casino idea.

    There’s a good chance that any new funding raised by the province will just end up being dumped into general revenue, given the current deficit we are facing.

    I think that history has shown that at the end of the day if we want something built we’ll have to do it ourselves. Is there a realistic way to fund transit expansion without having to rely on the province for support?

    Steve: The short answer is “no” because we need to raise revenue across the region, and the collection machinery is in the province’s hands.

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  28. Joshua Tossavainen said:

    If the OLG figures are accurate, I find it surprising that you are willing to dismiss $50-$100 million out of hand.

    The problem is, how often has Mayor Ford talked about eliminating the land transfer tax compared to raising new revenues for transit? The simple truth here is that everyone has a strong suspicion that any money raised from a casino would actually go towards cheap political gain by eliminating the land transfer tax rather than towards funding transit.

    Steve: And for reference, the LTT brings in about $300m/year.

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  29. Ontario is not facing a $17Bn deficit by 2017 anymore. In fact, the deficit is reducing much faster than expected and is in the neighbourhood of $4Bn less this year than budgeted. (In the neighbourhood is a euphemism for saying I am going from memory and didn’t double check this.)

    I think the Drummond Report was a deliberate attempt by the Liberals to give them cover to do whatever they pleased. The intention was probably not to follow its recommendations but to generate a “we could be even worse” atmosphere as the government attacked teachers and civil servants.

    A report’s recommendations are not too surprisingly linked to the writer’s preconceived notions. Hire a bank economist, and you get a certain flavour to the outcome. If the government had instead hired, say Jim Stafford, the report would have been dramatically different. Neither the Drummond Report, nor the imaginary Stafford Report are “facts”. They merely represent the interpretation of a filtering of the facts by economists with a point of view.

    Andrea Horwath’s “Corporate Loopholes” are no different than our Mayor’s “Efficiencies”. Both cater to a certain predisposed bias – either against Corporations or Civil Servants – and are not really based in reality. As you have pointed out Steve, when push comes to shove there is no money there. Further delay is all that results.

    Steve: I think what annoys me more about the “loophole” is that the same money gets “spent” for different things depending on what Horwath is talking about at the time. Even if there really is $1.3b for the taking, we can only spend it once. Indeed, this money is included in the NDP’s budget projections along with, by the way, a paltry additional sum for transit capital spending.

    Unfortunately Ms. Horwath continues to pursue silly populist policies instead of social democrat solutions. She talks of “families” who can’t afford to pay more. She sounds just like Rob Ford, another silly populist. The reality is that the extra cost is nominal in relation to our discretionary expenses and there is benefit from the projects paid for by taxes. It astounds me that a “progressive thinker” who should be embracing pre-environment policies continues the populist pursuit of cheap gas – cheap gas that we continue to waste and squander. There are also mechanisms to blunt the effects of various taxes on the truly needy.

    One concern I do have is with the parking levy – not a rise in the cost of parking downtown – but with malls in the inner suburbs. Malls are not my favourite place, and amongst the things I hate about them the most is the difficulty in parking. However, they are an essential part of the built form that we have committed to over the past 50 years or so and an important part of our current economy. Yorkdale, Sherway, Fairview etc. have many thousands of parking spaces and no parking revenue. I hope that in the future we will “wise up” and rebuild our suburbs on a denser model with public transport, but it seems wrong to make malls uneconomic on an immediate basis through the imposition of a new tax.

    Steve: The question is whether malls really would be “uneconomic” or if this is simply part of the cost of doing business. Before we dismiss this source of revenue, let’s see what the economics of malls really look like. Some are on their last legs, but not all, and the former might do better as redevelopment sites.

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  30. It would be nice to have a tax that could scale within a range based on how much is budgeted each year. The reality is that any large scale construction will have to be ramped up, and will not be constant year over year. Potentially an HST hike of up to 2% in steps of 0.5% changing each year or a fixed 1% HST, with a variable gas tax of 0-10 cents.

    This type of variable tax system would prevent money from going back into general revenue when the projects are done, it would also keep the money directly going to transit – and not be gradually hi-jacked by roads or other infrastructure projects.

    This would also force the politicians to spend money actually building things, rather than building plans…

    Even better would be if the tax was based on the previous years actual spending…this way it wouldn’t be able to be gamed by budgeting high and spending low.

    Steve: Actually, the tax revenue should be used at least in part to fund debt that would allow construction to proceed faster than the annual rate of tax collection.

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  31. So, basically, Toronto doesn’t have the collection machinery and legislation it needs to raise the funding for itself, and has to depend on the province for help. And the province, facing a $30 billion deficit by 2017, is in no shape to make the transit commitment that is needed. And even if we raised $3-$4 billion in new revenue via the tools suggested, the likely outcome is that a substantial portion of it will be shifted over into general funding in order to try and balance the budget.

    I guess we are in what is called a “no-win scenario.”

    Steve: $30b deficit by 2017? Say who?

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  32. Michael said:

    Pricing roads is one of the best ways to address congestion and HOT lanes are one of the fairest options as it still allows those who can’t afford to pay an alternative whereas a flat congestion toll does not. It also helps moderate demand. I think its a fairly agreed upon fact that when it comes to highways you can’t simply build your way out of congestion and although HOV lanes are great in theory, there aren’t enough people with the flexibility to commute together yet to make them efficient.

    That’s why I think we should focus on expanding the HOV network so it is better utilised … by transit and carpoolers alike.

    If the HOV network can be expanded (by using the existing express lanes) and opened up to carpoolers “registered” with SmartCommute … ideally, taking advantage of the existing commuter lots and the PRESTO card for electronic payment … then there would be a large pool of regular carpoolers who would benefit from an expanded HOV network … rather than a smaller group of informal carpoolers and HOV lane users in underutilized HOV lanes.

    I support high occupancy toll lanes but only after the HOV lane network is and transit are expanded. The TRBOT’s proposal is not the best way to introduce HOT lanes to the GTA.

    Cheers, Moaz

    Steve: Presto as a payment model for HOV lanes is a non starter as any kind of validation at entry requires queuing space. Something that can be read at speed is needed.

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  33. Commenters, BofT and Steve are to be commended for discussion. It’s very good to have the beginning of discussion about how to raise the big bucks.

    It’d also be helpful to have a thorough analysis (including externalities) of just how much every car/driver does not pay each year; there have been a range of analyses over time and it could be as much as $4700 a year, though the figure I often use up here is from Vancouver – of $2700. One example of the more hidden costs of cars is the lead in the soil; and other metals are now used it seems. There’s climate change too etc. etc., so it’d be nice of the BofT explored that aspect of things thoroughly and shared the results too.

    I don’t understand then, why there isn’t discussion of a Vehicle Registration Tax. It can be tweaked according to size/weight/type of vehicle, and yes, the proceeds could be directed specifically.

    We may have to also look to Curitiba – surface busways and tweakings got the overall capacity of a subway for 1% of the cost, but it meant political will. Judging from the lack of movement on biking on Bloor for instance, that’s a rare quality in Caronto.

    And while it’s too big a city to be able to ride a bike across it all the time, we don’t use the bike enough for complementing overall mobility. And heck, if one wants roulette… tune up the bike!!, though it’d be a good idea to let the City know that you think it’s on the dangerous side in case something does happen.

    Steve: The busway in Curitiba takes up a lot more space than just a few lanes in the middle of the road. And please stop trotting out that “overall capacity of a subway” phrase. If we take current subway capacity in Toronto at about 25k/hour (1,000 per train leaving room for crush loads in peaks), this translates to over 400 passengers per minute. There is no way regardless of which kind of bus you might run that this capacity can operate past a point unless there is a lot of express operation (requiring even more road space) and very big station capacity at express stops. BRT has its place, but it has been badly oversold using Curitiba (which itself is running into problems with capacity and rising cost) as an example.

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  34. Steve: Presto as a payment model for HOV lanes is a non starter as any kind of validation at entry requires queuing space. Something that can be read at speed is needed.

    Sorry, I didn’t mean queue and tap (or “Touch ‘N’Go” as they call it in Malaysia. I’m thinking of elevated toll gantries combined with transponder and payment card, like the 407 ETR … except the card would be the PRESTO card.

    When Singapore introduced Electronic Road Pricing all vehicles intending to travel into ERP zones were fitted with transponders that linked to the CashCard (the electronic payment system for cars and parking). Malaysia’s “Touch’N’ Go” cards can also be fitted into transponders (SmartTAG).

    In 2009 the CashCard and the old EZ-link (transit payment card) were replaced by a single payment card good for ERP, parking transit, and small transactions at stores and restaurants.

    I believe that any toll collection in the GTA will end up using a similar system. Of course, I hope that the PRESTO back end network can handle it.

    Cheers, Moaz

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  35. I was thinking that the issue is that the suburbs (except for net employer suburbs like Mississauga) don’t have enough employment in relation to residential density and that this is the reason for all of this sprawl. That if they had more jobs closer to home, we wouldn’t be in this mess. But that may not be the issue. The more that I read into this issue, apparently the policy that I suggest (creating more jobs in the suburbs) is probably the culprit behind why we are in this mess in the first place!

    That’s not to say creating jobs in the suburbs is bad. Not at all. In fact this is necessary. BUT when you have a bunch of office parks and industrial/commercial zones scattered across the GTA and no viable regional transit to connect long-haul commuters to all of these core employment nodes, then it’s no wonder that we have so much traffic congestion! Like I said, Mississauga is a net employer (high job to population ratio). About 56% of jobs in Mississauga are held by outsiders. But only 55% of Mississauga residents work in Mississauga despite the wealth of jobs. Because life happens. Your company relocates you and you really have no choice in the matter unless you quit.

    I live in Mississauga and was working mainly in a Brampton office park. You need to drive there (takes 20-25 minutes in the morning, 25-30 afternoon). It takes 1 hour 9 minutes by public transit (including walking and waiting) minimum to get there. I have flirted with the idea of relocating to Brampton to be closer to work. But then a year and a half later, they relocated my team to another office park in Mississauga anyway (takes 14-18 minutes by car, 40 minutes minimum by transit. Are we noticing a pattern here?). But then they started having me do side contract work for one of their teams based in that Brampton office. So I had to commute to two locations (!) Now I’m back to working in Mississauga full-time. And guess what? Now they split off part of my team and now they are going to be moving us back to Brampton. And the real doozy is that my contract is coming up in a few months and I may have to find a new employer. Who knows where I will end up next. My commutes are not hard to do by car. But I dread having to do a painful commute for my next job.

    Offices relocate, employees are re-assigned, people switch companies, switch jobs. There is no stability. Sure you can buy a house or condo reasonably close to your business park. They can implement mix-use policies to encourage this. But when you have to go work in some other business park, what now? Sell your house/condo?

    The various employment parks across the GTA have poor regional public transit connectivity. Work in downtown Toronto? There is a GO station for that (though it’s not as glamarous as it sounds). I would feel depressed if I had to work in downtown Toronto. I’d have to get to the GO station early to pick up a parking spot because the feeder service sucks and the parking lots fill up early. I’d have to cross my fingers and hope that I can get a spot on the over-crowded train. If my office is more than walking distance from Union Station, that’s another thing to worry about.

    But there’s definitely not a GO train that goes in the direction of my Brampton office. Gotta take the GO bus and even that isn’t close by. The time it takes to take a feeder to City Centre (nearest GO station but in opposite direction of where my job is), ride the GO bus and then take a final feeder bus to work is actually longer than taking local transit straight through. And local transit is too slow for 20 km commutes.

    Either regional transit is improved (GO Transit has to play a large role in this. But so do the municipal transit agencies) or people and businesses have to adapt to the challenges ahead.

    Steve: Thank you very much for this comment which, in one place, shows so many of the basic problems of the way our region has evolved, the problems of presumed mobility associated with business and job relocations, and the unmet challenge to transit at the local and provincial level of serving the demand patterns we have created.

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  36. Joshua: “So, basically, Toronto doesn’t have the collection machinery and legislation it needs to raise the funding for itself, and has to depend on the province for help.”

    Not quite. The City of Toronto has the City of Toronto Act that allows for it to bring in new taxes and raise limited revenues. Rightly or wrongly, the current administration does not want to take advantage of this and wants to remove other taxes like the Land Transfer Tax even though it generates much needed revenue for the city.

    The reliance on the province and other governments is due to the fact they can raise substantial revenue from other sources the City cannot. And, historically, the province until the 1990s had a hand in helping the TTC with its budget.

    The sad reality is while all of these groups, including Metrolinx, continue to talk about various ways to raise revenue nothing will happen until the current administration is replaced with someone more transit-friendly, or City Council decides to take the keys away from the Exec. Cmte and Rob and Doug. They’ve taken the lead before so they might be able to do it one more time.

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  37. Can I put in a request for your next article? We need a Steve Munro smackdown on the NDP.

    Steve: That is not as straightforward as it might seem. My complaint is much more with what passes for leadership and the evolution of a style that panders to much of the same constituency as the hard right. The fundamental position that society and government exist for the betterment of all of the population, not just those who own the levers of power, is a basic outlook I have always supported. However, the NDP leadership seems incapable of making a consistent argument about financing and trots out the same phrase about corporate tax loopholes over and over for more than one issue.

    The party’s proposal, as I understand the policy papers on their website, works like this. Businesses used to be able to claim certain expenses before the recession triggered by the financial meltdown of 2008. On a “temporary” basis, some of these expenses were disallowed for tax purposes and this represents about $1.3b in foregone revenue, or what is called a “tax expenditure”, if the allowances were reinstated as planned on a gradual basis up to 2018. So far, so good. If you agree that these expenses should not be tax deductible, then that’s net “new” revenue for future budgets compared with current projections.

    However, this has already been counted by the NDP as part of their multi-year budget projection as a contribution both to their own programs and to reducing the deficit. The money is not just sitting there for whatever new scheme might come along. In fact, the level of planned new transit spending in the NDP budget proposals is trivially small, under $100m/year on a province-wide basis.

    Just this week, Andrea Horwath has treated that $1.3b as if it is money sitting there looking for a home both on the transit file and for job training, a field the Feds seem about to vacate. Therefore, at current count, there are at least three places where the same money is spent for different purposes by the NDP.

    The fundamental problem is that the level of transit investment required in Ontario greatly exceeds the current level of commitment of any of the three parties and new revenues are required one way or another. Horwath dodges this challenge by implying that all of the money we need is available from the corporate tax stream, including a source her party has already earmarked for other purposes.

    I can agree with a debate that questions why, for example, income taxes both on individuals and corporations, are not included in the mix as these are more progressive and relate to ability to pay. However, the NDP seems to be hung up on one revenue source to the exclusion of any others. This entire discussion needs to look at all of the ways money can be raised and what projects are most appropriately prioritized and funded, but that requires more than sound-bite sized comments about “everyday families” and “corporate tax loopholes”.

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  38. GPS Pay-per-Kilometer on all roads based on time and demand. We have the technology, invented in Canada and formerly advanced by Skymeter (bankrupt so I have no financial conflict to be clear.) This technology would be anonymous, does not ‘track’ in real time and could be used as the basis for all car-related payment schemes from Parking to Insurance to lane-specific tolling to entirely replacing the gas tax at around 3-5% of revenue while completely eliminating the need for parking meters and the high enforcement and court costs associated with traditional parking systems.

    Singapore, the Netherlands, UK, Germany are all moving in this direction. Using the same solutions and expecting different results IS the definition of insanity. While I think you entirely miss the point of HOT lanes (See Patrick DeCorla-Souza’s work at USDoT/FHWA on ‘the congestion paradox’) I don’t disagree it can also have road-building results and enable people to live further away. The ‘Lexus Lane’ argument you throw forward has largely been dismissed. And tolling individual roads rather than changing the pricing signals has other unintended consequences on the system. It’s a system and requires system-based solutions, not piece-meal reactions. No jurisdiction in the world that uses HOT uses it as a revenue tool, but rather as a dynamic pricing system to reflect real-time demand. Setting .30 cents/kilometer has no basis other than to grab money, and I have to wonder where they determined that was the appropriate market-clearing price.

    Bern Grush is likely the wisest man in Toronto when it comes to this issue and sadly, few people actually listen to his innovative ideas that would solve this issue – mostly because he doesn’t spend hour upon hour at City Hall and thinks little of people without vision or courage.

    We have a solution. We just don’t have political will to implement it and truly create a new paradigm.

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  39. ps, you’ll have to forgive me for not engaging entirely in this discussion. It’s rather depressing to have spent 18 months traveling North America for a Toronto start-up company, talking to people like Mary Peters, former US DOT Secretary, King County Chair Ron Sims, Mayors and deputy mayors in US and Canadian Cities and heads of local DOT’s who’s first question was always, “have you tried this in Toronto.” Many investors and believers lost lots of money while Canadian government dillydallies about shuffling deck chairs on the Titanic. Toronto lacks the political courage to solve this issue. We have a solution but defensive egos of know-it-alls has meant no movement. The best solutions to problems usually come from an entire rethink by a non-expert – Skymeter was it.

    The idea that would have the most impact, that no one is talking about, is market-rate and dynamic parking pricing.

    I’m sure we’ll still be talking about this after another 700 reports and another 5 years of political gridlock.

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