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Visualizing (yet another) funding plan that might lead to transit expansion…maybe

In my column this week, I looked at the transit funding strategy unveiled last week by a provincial advisory panel led by Anne Golden and Paul Bedford.

In summary, it’s a good plan created by smart people.

The report's biggest issue is that it comes on top of other good plans that were also created by smart people, none of which have led to squat in terms of actual transit construction. We have lots of transit reports but we don’t have a lot of transit. Will these recommendations actually lead to honest-to-goodness, shovels-in-the-ground construction? It's an open question.

Still, it’s worth taking a deeper look at the transit advisory panel report and contextualizing it with other funding recommendations we’ve seen recently. Let's get nerdy.

Revenues recommended by the advisory panel

Here’s a quick glance at what the advisory panel recommended for revenue, compared with other strategies we’ve seen this year. The chart includes Toronto city hall staff recommendations, the outcome of Toronto City Council’s bizarre — and incomplete — revenue tool debate and the final set of recommendations from the Metrolinx investment strategy, which came out earlier this year.

The advisory panel recommends two options — Option A is a ten-cent hike to the gas tax, and Option B is a five-cent gas tax hike paired with an HST increase. Option A seems to be the more favoured option amongst panel members, though the report doesn’t take sides.

There’s a strong political context to these recommendations, which is important given the minority government situation at Queen’s Park. They’ve thrown bones to both opposition parties.

For the NDP, who have continuously pushed the idea that all our transit needs can be funded through corporate income taxes, the panel recommends a corporate income tax increase of 0.5 per cent. That will raise about $187-million a year in the GTA.

For the Tories — who have long pushed the idea that transit can be funded by government savings even though they’ve never shown their math — the panel has thrown in a recommendation to redirect existing HST revenue captured at the gas pumps, generating about $80-million a year for transit. This isn’t new revenue, so the government would have to find efficiencies or program savings — maybe program cuts — to pull this off.

But the big focus is raising the gas tax. And there’s good reason for it. The gas tax is a flat rate per-litre charge that hasn’t changed since 1992, meaning there’s an argument to be made for an increase just due to inflation. And drivers in the GTA currently pay about ten cents less per litre than drivers in Montreal and Vancouver, so there’s precedent for raising the tax without causing total economic collapse. And an increase would be easy to implement — there’s nothing required in terms of lead time or additional infrastructure.

Most importantly, it goes right to the heart of what the Big Move is trying to do. If transit investment means some people are able to spend less time sitting in traffic, they’ll spend less of their money on gas — even with a higher tax.

I criticized Toronto City Council earlier this year for abdicating their responsibility on the transit file. They had one job: recommending a strategy to raise $2 billion a year to fund transit in the GTA. Instead, a majority of councillors opted to play some mealy-mouthed game where they endorsed no strategies to fund transit, leaving only enough revenue sources on the table to fund $1.5 billion in anual transit investment. They came up short.

At first glance, it looks like the advisory panel came up short, too. However, that’s offset by their recommendation to use more debt to pay for transit. For example, here’s the hypothetical proof-of-concept plan laid out in the report for 2017-2027. (Actual implementation details would differ.)

It makes sense to leverage debt to fund transit, especially given current low interest rates and provided the projects make sense from a ridership perspective. It’s the same principle people use when they take out a mortgage to buy a house. It makes sense to pay for assets over the life of the asset.

But I don’t expect that will stop critics from acting like debt is a terrible boogeyman that will eat our children.

The other trick the advisory panel pulls off? Lowered expectations. Their recommendations cover just 75 per cent of the projects included in Metrolinx’s next phase of the Big Move. Most of the biggies are still included — among them the much-needed downtown relief line — but they’ve taken out some projects that would require long lead time. That includes proposed enhancements to GO service — including electrification of the Kitchener line — and the full extension of the Yonge subway line to Richmond Hill.

I like the recommendations because they’re practical and politically savvy. With this strategy, Queen’s Park could have new revenues coming in and shovels in the ground quickly. The panel has not given the government much room to further stall.

But it’s important to remember that these recommendations aren’t comprehensive. This plan could — with the political will — get shovels in the ground. But it won’t keep them there, and it won’t build all the infrastructure we need to keep the GTA moving in the decades ahead.

To do that, long-term thinking is required. That means considering some of the revenue tools the panel ruled out because they couldn’t be implemented quickly — items like road tolls and parking levies — and creating a closer link between urban planning and transit planning, making transit more cost-effective and accessible.

But, hey, one step at a time.

This post was originally published at on 2013-12-18T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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