The Gaping Hole in TTC Funding

At the TTC Board Meeting on June 23, 2022, the quarterly financial update reviews the status of the 2022 operating and capital budgets together with the status of major capital projects. This report is one of the more valuable contributions to understanding the state of the TTC, certainly in more detail than the superficial CEO’s Report. But even at that, its concern is primarily with the current year.

For 2022 the TTC is not out of the woods on its operating budget and political efforts continue to “shake the tree” at the federal and provincial level for funding to make up the Covid deficit caused by running nearly full service with less than 60 per cent of historical ridership. To the degree that governments recognize that the country is still in a pandemic and provide backstop funding, the TTC can continue to appear close to normal to its riders. However, that level of support will not last forever and 2023 will bring hard decisions to Toronto Council about how much service they can afford to provide, and whether a continued freeze on fares is affordable.

Lurking out of sight is a much larger deficit in capital program support. Before the pandemic, the TTC published its capital plan including many, many items that had previously not been publicly disclosed or which were listed “below the line” in the budget as being without funding commitments from governments. The heart-stopping total was three times the level historically acknowledged as the TTC’s capital needs, and this did not include major new transit projects. Ontario took over some of the largest, but also inflated their cost with design decisions such as undergrounding the Eglinton Crosstown West Extension (ECWE). Meanwhile, the Eglinton East LRT to Malvern and the Waterfront East LRT do not show up on TTC’s books beyond a modest amount of design funding.

This chart from the 2022 Capital Budget shows the severity of the problem. In the short term, money is available from one-time, project-oriented subsidies. In the long term, funding depends on finding political support for transit spending at a much higher rate than in past years and largely on projects that do not involve system expansion.

For many years, Toronto and the TTC have muddled through the Capital Budget cycle by scraping together enough money to fund near term requirements and hoping for a better tomorrow. Concurrently, the focus of transit debates has been on new builds, the “we deserve” school of transit planning, while funding for other projects is left for another debate. Two special levies, one implemented during Rob Ford’s mayoralty to fund the Scarborough Subway, and one under John Tory to fund other transit projects, placed an additional charge on the property tax base over and above the so-called inflationary increase. Tory’s City Building Fund is still not at its full level, and there will be little desire to add even more transit taxes in the medium term.

This problem is not unique to transit, and other calls for funding by various governments are obvious: housing, health care, education, just for starters. Transit neither gets nor deserves all of the pie. What we do not really know is how big that pie is, and when governments will say “enough”.

When the feds were handing out large transit subsidies both as a city building and economic stimulus, a question asked by some transit advocates and community groups was “why are you not imposing conditions on which projects are built” including environmental responsibility and overall transit needs. The response was simple: Toronto Council identified its priorities, that’s where the money is going and, by the way, do you really want the feds dictating which transit projects are funded?

There are many key projects without funding, and at some point the obvious response will be “but we already gave you billions” out of a national program that is shared across the country.

The TTC Board appears particularly unwilling to discuss these matters in public and is generally overwhelmed by the size and complexity of the budget. Once upon a time, the TTC had a Budget Committee that almost never met, and recent attempts to re-establish one were voted down by the Board. This is an abdication of responsibility for a core function.

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