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Metrolinx Issues Short List of Transit Funding Tools

The region needs at least $2 billion a year in new money to build transit infrastructure; today we got closer to a specific proposal for how to raise it.

The regional conversation about transit—our lack of infrastructure, and how to pay for building more—kicked into higher gear today as Metrolinx (the provincial agency that oversees transit planning in the Greater Toronto and Hamilton Area, or GTHA) issued a short list of new funding tools it is considering to raise the needed money. That list will be further shortened over the coming weeks, with a final proposal being announced on May 27.

On today’s list: a wide range of tools, including everything from a sales tax increase to a rise in transit fares.

Metrolinx arrived at its short list after studying the implications of 25 potential tools, and holding public consultations across the region. In those consultations, president Bruce McCuaig summarized, residents emphasized four principles that needed to guide any decision: new revenue tools need to be dedicated specifically to transit projects; they need to be fair, “so there’s a link between how much people are contributing and the kind of benefits people receive;” they need to be regionally equitable, so that municipalities receive benefits that are “commensurate” with their contributions; and there needs to be complete transparency—people need to know how the funds are being managed and how projects are being delivered.

Metrolinx’s short list includes the four tools endorsed by the Toronto Region Board of Trade a couple of weeks ago; of those four, three were also the “clear preference of a majority” of participants in the public consultations. This gives us the beginning of a consensus: there are three tools which right now are out in front in terms of support. Those three tools are:

  • Parking space levy: this would be charged to property owners for non-residential, off-street parking (think malls and commercial lots). At a rate of $1 a day, this would raise $1.4 billion a year.
  • Sales tax: This would be an increase in the HST that we all currently pay at the register. At a rate of 1 per cent, it would also bring in $1.4 billion a year.
  • Fuel tax: Added at the pump, a five cent per litre tax would raise $330 million a year.

Those three tools, in total and at those rates, would raise about $3.1 billion a year—more than the $2 billion a year Metrolinx is aiming for. (Many transit experts think that is a low-ball number, however, and that we won’t be able to build and operate all the transit that we need with the $2 billion alone.)

The tool that is both on the Board of Trade list and Metrolinx’s list but which didn’t receive public support was a toll on HOV (high occupancy vehicle) lanes for drivers who are alone in their cars but want to use those less-busy lanes anyway. That would raise only a relatively small amount of money—an estimated $25 million a year at 30 cents per kilometre—but is an example of the kind of tool Metrolinx has on its list because it satisfies another policy objective: correlating revenue tools with changing behaviour.

The other seven tools on Metrolinx’s short list—

  • Payroll tax: this could be levied either as a percentage of employees’ pay or based on the number of employees a company had. Estimated revenue at 0.5 per cent: $700 million a year.
  • Property tax increase: this was widely rejected at public consultations. From Metrolinx’s report: “Across the board, GTHA participants agree that property taxes are already maxed out.” Many were also concerned that this would be unfair, since different municipalities pay different property tax rates. Estimated revenue: $670 million a year.
  • Vehicle kilometres travelled fee: this would be an entirely new kind of mechanism, which would see drivers charged for each kilometre they travel within the region, or a designated portion of the region. At three cents per kilometre, it would raise $1.6 billion a year, but there are many questions about how it would be implemented, and what the costs of creating such a new system might be.
  • Highway tolls: in contrast to the HOV lane tolls listed above, these would be tolls on all lanes, applied on designated highways. These were also widely rejected at the public consultations. At 10 cents a kilometre, tolls would raise $1.4 billion a year.
  • Development charges: this is a one-time charge that a developer would pay either on new construction or in some cases on redevelopment as well; at a 15 per cent increase, it would raise a relatively modest $100 million a year.
  • Transit fare increases: probably the most surprising item on the list—TTC Chair Karen Stintz expressed concerns about this specifically because transit agencies like the TTC need fare box revenue to pay for operating costs, to cover the drivers and fuel and maintenance they need to keep the infrastructure that’s been built actually running. A 15 cent per ride increase would yield $50 million a year.
  • Land value capture: this would be a mechanism that allowed the government to collect more money from properties which go up in value due to their proximity to new transit lines. No specific estimate was provided as to the revenue it might raise, but McCuaig said it would be at the low end of the tools under consideration.

The City of Toronto has been conducting its own public consultations on transit funding; the results are expected to be released in the coming weeks. City council will debate this issue, and come up with its own set of recommendations for Metrolinx to consider, possibly as soon as its May 7–8 meeting. At a separate press event that took place at the same time at the Metrolinx announcement, Mayor Rob Ford was asked for his reaction to the short list of funding tools. His response? Pretending to vomit.

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