The Toronto region is very congested, and if it is going to continue to grow, it needs more and better public transit. At this point in time, most people in the region seem to accept this idea.
The elephant in the room, of course, is how to pay to build more transit. The province’s regional transportation agency, Metrolinx, has a plan called The Big Move that identifies what needs to be built. This plan covers the Greater Toronto and Hamilton Area, referred to as the GTHA.
The provincial government put up a considerable amount of seed money to get this plan started — $11.5 billion across the region, of which $8.4 billion is going to Toronto to pay for the Light Rail Transit lines now going in on Eglinton/Scarborough, Sheppard East and Finch West. But that was just to prime the pump — the rest of the plan will need some $50 billion over 25 years in order to get built, and it looks like that money is going to have to be raised in the GTHA. (Note: all funds are in 2010 dollars, which is what has been used in all discussions of the plan’s funding).
Metrolinx was supposed to have a proposal for raising this money in 2012, but that got delayed until 2013 (after the provincial election, perhaps not coincidentally). Metrolinx has to present a proposal for raising this money in 2013. The deadline is coming up soon, and it’s time for the inhabitants of Toronto and the rest of the GTHA to talk about what kinds of funding model (read: taxes and fees) they would accept in order to pay for transit.
The delay in the funding plan may have turned out to be useful, in the end, because Toronto’s transit drama of the winter of 2012, when Mayor Ford’s plans for a subway on Sheppard collapsed because there was no reliable funding model, made everyone aware that the city would have to raise money to build transit. Even Ford himself and right-wing members of his executive committee started proposing fees and taxes to pay for transit construction.
The problem with all of the funding plans that have been proposed by members of Toronto City Council is that they are nowhere near enough. They might raise $100-$200 million a year, but Metrolinx’s plans will eventually require $2 billion a year to get built. A single, modest tax is not going to cut it.
The better news is, any funding mechanism proposed by Metrolinx will cover the entire GTHA. For one thing, that means a lot more people contributing. Equally important, it means that one of the primary objections to any tax imposed only within Toronto — that people would drive to the suburbs to avoid it — no longer applies. The new revenue tools will cover the entire GTHA, meaning that any drive to get away from it would be long and inconvenient, minimizing that issue.
In 2010, the civic organization CivicAction released a study, “Time to Get Serious: Reliable Funding for GTHA Transit” (PDF), that looked at the various revenue options available to Metrolinx (disclosure: I was part of the working group that prepared this study). Over the next few days, I’d like to look at the “big four” — the four possibilities that would raise serious amounts of money — assessing the advantages and disadvantages of each one and providing a forum for discussing them.
The “big four” revenue possibilities are:
In all likelihood, a combination of at least two of these will eventually be required to pay for new transit.
I’m going to look at each one through four isssues:
1) How much would be charged?
For the big four, I’ll look at how much would need to be charged to raise $1 billion. These amounts will be based on the estimates in the CivicAction report, so they are by no means exact, but they provide a ballpark figure.
2) How much would it cost to implement?
A revenue mechanism that is expensive or complicated to implement becomes a less appealing option.
3) Does it provide a behaviour incentive (positive or negative)?
Since Toronto’s problem is congestion, a tax that helps reduce congestion while also paying to build transit creates an additional benefit. Taxes that increase the cost of driving would encourage behaviour change that would reduce the number of cars on the road and, moreover, increase transit use and revenue. So a behaviour incentive creates an additional potential benefit towards reducing congestion, on top of providing funding.
But some taxes can also create unappealing behaviour incentives that could cause other problems.
4) How politicially viable is it?
No tax is ever appealing, but some taxes are less appealing than others.
The one factor that is a basic requirement for political viability is that all funds will be directed towards transit. Referendums in the United States have shown that new taxes can be politically feasible as long as they are directed explicitly towards funding transit projects (and sometimes other transportation projects).
Since one of the goals of this series is to get a discussion going, I’m going to encourage discussion about each of these options in the relevant post.
Tomorrow: the Commercial Parking Levy