Remember this phrase: funding allocation formula.
Last week, before Dalton McGuinty dropped his bomb, everyone piled into the transit financing debate and I’m told that more blue chip advocacy is on its way. The mayor’s executive committee ordered up a consultation on revenue tools. John Tory’s band of civic white knights came out with a savvy campaign (“Your 32”) designed to get residents to focus on the individual opportunity cost of all that gridlock.
Even Tim Hudak threw in his two cents (although not much more).
But as the executive committee debate illustrated, we’re headed straight into the weeds of this monumentally complicated policy fix. One of the trickier themes that surfaced: how much of this new funding will be spent inside the City? Or less politely, shouldn’t money raised inside the 416 be spent inside the 416?
So let’s have at it:
Everyone, save the brothers Ford, is talking about earmarked regional levies; even Hudak, trawling for seats in the GTA, said in his City Hall scrum on Tuesday that he’s prepared to listen what the public has to say about revenues tools. But as this debate begins to take shape, we will almost certainly back into a political knife fight over who gets what, and the mechanics of deciding how, where and when future funding streams get (re)distributed within this vast urban area.
I’m not a tax expert, but I’d predict this story will vary sharply according to the type of tax measure being considered. For example, if the province imposes an L.A.-style sales tax just for the GTA and Hamilton, the burden will probably be distributed fairly evenly, and it will be closely connected to population distribution. The same, I’d guess, is true for a vehicle registration tax.
But what about tolls and parking levies? It’s entirely likely that one group of residents will end up contributing a larger chunk of change than another. The suburbs have lots of parking and so I’d expect that a parking levy would hit outlying commercial property owners (and thus their patrons or tenants) harder than those downtown. Commuters who work in the 905, or 416ers who do a reverse commute, will likely pay the lion’s share of a toll on the 400-series highways. If there’s a congestion charge for the core, the burden will be mainly felt, I’d guess, in affluent neighbourhoods such as High Park, North Toronto or The Beach.
Now ask yourself this: if you live downtown and don’t drive — or don’t drive much — how much will you contribute each day? Conversely, if you shop at Wal-mart, commute to Newmarket, and operate two cars because your subdivision isn’t close to anything, could you be dinged multiple times every single day? And what about income level: should we worry about whether these tools are regressive?
Equity, surely, should count for something.
Maybe I’m over-analyzing, but it seems to me that at some point, someone (i.e., Metrolinx) has to come forward with models and funding allocation formulas that illustrate to the public where in the region the different tax streams will come from…and where the proceeds will end up. After all, everyone expects to know what they’ll be getting for these extra fees, and that’s not an unreasonable demand.
It will not be sufficient for Metrolinx/CivicAction/Board of Trade to point to the pretty maps in The Big Move and say, “Here, look, there will be something for every corner of the GTHA once we’re finished 30 years hence….” Nor can Torontonians revert to the old argument about how ridership – 90% of all GTA transit trips take place inside the 416 – should determine where the funds are spent.
If 905 residents end up contributing the lion’s share of the new dollars, but most of them flow into tunnels in downtown Toronto, no amount of soothing talk about improving the regional transportation network will halt the political backlash.
Thus the question of how to allocate new funds in an equitable way that produces real improvements for the outlying areas becomes incredibly important. Yes, the [Insert Euphemism Here] Relief Line is crucial. But the revenue tools must be politically sustainable if the goal is to deliver stable, long-term funding.
Therefore, in order for this consultation process to become meaningful and engaging rather than divisive and stupid, Metrolinx must begin thinking about adding layers of detail to the revenue tool proposals it is cooking up for next June.
The agency, ideally, should be able to come forward with some reliable modeling data demonstrating how the tax burden will be distributed, geographically and from a socio-economic perspective. It should address the question of how one type of revenue could balance out another. And, crucially, Metrolinx ought to work up much more detailed project priority lists and construction timelines, as well as case studies illustrating how the new taxes and services would impact people and families living in different parts of the region and in a range of circumstances.
The genius of CivicAction’s Your 32 campaign is that it brings those oft-cited commute times stats home, as it were, and turns that impersonal $6 billion productivity loss estimate into a more specific cost. There’s a good lesson there: As Metrolinx trudges towards next June, and with the advocacy community now fully engaged, the agency would be well advised to start painting a highly detailed picture of what these new “tools” will mean for all of us, both in terms of cost and benefit.
This scheme is going to be a very tough sell. If the city and the province truly want a constructive debate, they’re going to have to be as forthright as possible with a lot of people for whom these “tools” are just another damn tax. If it doesn’t compute at the household level, the revenue plan will never reach the floor of the provincial legislature.
8 comments
I agree that any type of levy or tax will be a tough political sell. I would add 3 considerations:
One: the debate needs to recognize that the current tax system subsidizes the suburbs and sprawl. Since suburbs are more expensive to service because of their low density but this is not taken into account in property taxes, suburban dwellers effectively do not bear the true cost of the services they obtain.
Second; similar point is that a flat transit fee regardless of distance has the same effect. Hopping on the subway at Kipling to go to Union is not more expensive than a 2 station ride. Again, this is a subsidy to suburban dwellers.
Finally, a levy like toll should not be strictly regarded as a revenue tool, but also as a way of reducing congestion. Tolls, or London-style congestion charges have the objective of altering driving behaviour by reducing peak-time driving. This is a net benefit to drivers.
@Julien
Residential property taxes in the 905 are considerably higher than in the 416, and have been that way for a long time. At a macro level, yes, the tax system (and other fiscal levers) encourage sprawl. But at the level of practical politics, Mr. and Mrs. Blogs who live in Richmond Hill do not look at their bank account and say to themselves, `Gee, I’m lucky because we benefit from the hidden subsidies that allowed this cul-de-sac to be built, and so therefore I will be glad to ante up for a gridlock tax.’ That argument will go exactly nowhere.
Julien,
I don’t think your claim about subsidy of the suburbs is true. Property taxes are levied as a value of the home… homes in the 416 suburbs are worth less than homes in the inner city… so taxes on inidvidual properties are lower. Asking that they be higher is arguing that a higher tax be imposed on people who have less money to begin with.
Taxes in the 905 belt of cities are in fact a good deal higher than taxes in the city of Toronto on home-owners, precisely to afford the services they are provided.
People in downtown Toronto contribute nothing to subsidizing people living on Oakville or King City.
And people also choose to live in these low-density neighbourhoods for the lifestyle it offers. Arguing for increased density to lower taxes is a choice that they can make… and apparently choose not to.
R.
Julien,
The argument that the suburbs need to be subsidized due to low density is one that seems apparent. Though if one looks at the budgets and literature it is not so simple. Capital cost’s (which are supposed to be covered by development fees) would be higher. There comes a point though when the savings from density are maximized and new cost’s are introduced. Specialized fire fighting equipment, Higher volume water treatment and sewage pipes, and higher construction costs. IIRC a city size of .5 to 1 million is the most cost ‘efficient’.
That is only on the capital side. On the operating side density provides even less of a savings. The incidence of the extra cost’s are also important. Ontario drivers paid more than 6 billion in gas taxes last year, and while I don’t have the figures, I would bet dollars to doughnuts that this is far more than spent on roads.
Lastly, seeing that the province has helped pay for the construction of higher order transit in Toronto, and that the subways and GO trains make for a viable commercial sector downtown, it could be argued that the suburbs (or in Toronto’s case, the 905 regions) are already subsidizing the core. The commercial office sector in Toronto pays far more in taxes than it receives in services. The net benefit of this amounts to hundreds of millions of dollars per year that goes to providing Toronto residents with services.
“Second; similar point is that a flat transit fee regardless of distance has the same effect. Hopping on the subway at Kipling to go to Union is not more expensive than a 2 station ride. Again, this is a subsidy to suburban dwellers.” .. If transit riders are going to help with the funding instead of just adding a fare increase across the board… we really should be transitioning to fare by distance so that people who are responsible for more of the system costs are also responsible for more of the funding.
Richard, one thing for sure is that Toronto subsidizes each TTC ride a non-resident takes. As mentioned elsewhere, a zone fare system or provincial operating subsidies would start to correct this imbalance.
Another option would be to have lower fares for residents than non-residents. Not sure how common this is in other cities.
Joe C.
The problem with that is that non-residents already pay more to commute into TO because we will have taken a) our own local transit (Brampton, Mississauga, etc.) or b) GO transit to get into TO in the first place. Having said that, I am in favour of a fare by distance model though.
Just another observation. Moving between cities like Mississauga, Brampton, York Region is seamless and getting better with Presto & 2 hour universal transfers. Transitioning to Go gives us a reduced fare. And then, separately, there’s the TTC, an extra full fare, pretty much non-integrated as far as fare structure, and with a transfer system that’s far more complicated (and behind the rest of the region as far as the Prestocard). Part of this exercise is realizing that the entire region has to become more integrated. Again having said this, I support a fare by distance structure. I commute to the 416 from the 905, I expect to pay more and do. But this isn’t just about the TTC.