The Mythology of “New” Federal Gas Tax Subsidies

Recently, Canada’s new Finance Minister rolled into town and visited TTC’s Hillcrest Yard for a celebration of the “new” gas tax revenue Toronto will see from Ottawa. Even Rob Ford was there, although he studiously avoided being photographed with the much-hated new streetcars his buddies, the feds, are helping to pay for.

TTC CEO Andy Byford gushed about all this new money and what a difference it would make to Toronto.

In a reply to a comment in another thread, I looked under the covers of the announcement and found it wanting. The issue is important enough that it merits a post of its own.

The Announcement

Ottawa has concluded a national agreement to which Ontario, the Association of Municipalities of Ontario, and the City of Toronto are partners. This will extend the gas tax regime a further 10 years to 2024, with annual indexation by 2%.

The program is not just a transit subsidy scheme, but an infrastructure support program for a wide variety of projects.

The total pool of federal gas tax dollars is divided by population, and within Ontario there are three blocks of funding: one goes to the AMO for allocation to all municipalities, one goes to Queen’s Park for projects in areas that are not incorporated towns, etc., and one part goes to the City of Toronto.

At the beginning of 2014, Ontario’s population was 13.6-million, while Toronto’s was 2.8m. On a per capita basis (the allocation scheme for the funding) this will bring Toronto just under $800m over the next five years, less than $10m more per year that we have received in recent years.

We often hear about the deficit in funding TTC’s capital plans which stands at $2.7-billion as of the 2014 capital budget report. Turn to the second last page of that document, and you will see that the TTC already provides for $154m/year in federal subsidies out to 2023. In other words, the deficit is only $2.7b because this “new” subsidy was already counted back in November 2013. The hole is only slightly less daunting if we actually get $160m/year, but the extra won’t go very far.

Yes, it’s nice to have continued funding confirmed by Ottawa, but this is not a new spend for them, merely the continuation of an existing program. The TTC’s budget woes are just as bad this week as they were before July 11.