The Karen Stintz Transit Shell Game
Karen Stintz has unveiled her "fully funded" transit strategy. It is a mess from start to finish.
On Tuesday, April 28, mayoral hopeful Karen Stintz announced her funding plan for a Downtown Relief subway line (DRL) together with a declaration of war on traffic congestion. Are these real plans, or an electoral juggling act intended to convince voters that Stintz really is on top of problems?
The plan would create a trust fund with a mixture of asset sales, redirected operating revenue, and higher parking fees on downtown City-owned lots.
|15 Year Revenue||Annual Budget Impact|
|Sell 51% of Toronto Hydro||
|Redirect traffic enforcement revenue||
|Redirect Parking Authority revenue||
|Downtown parking surcharge||
What would this buy us? About $1.2 billion of this would pay Toronto’s share for the first stage of the DRL (running from Danforth Avenue to downtown) presuming that provincial and federal governments would kick in the rest. Riders elsewhere hoping to benefit from a more extensive program (or any other transit project with municipal funding) would have to wait a few decades to see any progress.
As for how the revenue is generated, in summary: selling Hydro foregoes future revenues, may limit the City’s options to set future policy, and could expose consumers to higher prices for electricity. The municipal government already relies on revenue from parking and traffic fines, and redirecting it to this plan would mean that money would need to get backfilled or cuts would need to be made elsewhere. And a surcharge on municipal lots is simply a targeted user-fee increase that conveniently spares private lots. “Bunk” does not begin to describe this.
In more detail…
Selling a 51 per cent interest in Toronto Hydro might yield half a billion (this assumes that Queen’s Park would make a favourable change in its tax treatment of the scheme) and the capital income would be offset by a loss of half of the annual dividend Hydro currently pays to the City of Toronto. Stintz does not take this loss into account, claiming, in an interview with Torontoist, that the dividend might not be missed because efficiencies driven by the private sector would cause the company to grow, and the City’s dividend along with it.
In 2012, the dividend represented about 56 per cent of Hydro’s net profit [PDF, page 4]. If there are efficiencies to be gained that could boost that dividend, one might ask why they have not been pursued by the City thus far, and why a sale is necessary to obtain them. Hydro’s profitability would have to double in order to keep the City’s after-sale dividend at its current level.
Stintz claims that the lost revenue would only represent 1 per cent of the City’s $9.7-billion operating budget, and she would ask council to find savings to fund this. However, the next two items on her list—revenues from traffic enforcement and municipal parking—now contribute about $70 million to municipal revenues. Which is to say, she’s proposing to shrink the City’s annual incoming revenue by more than $90 million, redirecting that money to fund transit expansion; none of this is new money. It also creates a significant hole in that annual budget—the one council fights about every year, and the one that generally leads to much hair-pulling about increasing property taxes. Stintz’s budget hole is equivalent to well over a 2 per cent property tax increase.
Finally, the parking surcharge would apply only to municipal lots, not those in the private sector, and only on weekdays. Stintz justifies this selective approach by contending that the City lots are underpriced relative to the competition. (This neatly dodges her former opposition to parking surcharges on a city-wide basis.)
Stintz’s sales pitch is that all of this will reduce congestion, but that is a bogus argument for this funding scheme.
Toronto’s two subway proposals (the already approved Scarborough extension and the Downtown Relief Line) will not produce any new transit service until the 2020s at best. When they do open, they will provide new service for riders in certain parts of the city, but certainly not all of it. They will do nothing for congestion in the next mayoral term.
Metrolinx’s work on the broader region’s transit strategy, The Big Move, confirmed that the full buildout of a much larger transit plan would only contain the growth in congestion, not reverse it. The two subway lines Stintz supports are only a small part of that overall plan.
Another major part of her “war on congestion” would be the rollout (at a cost of $400 million) of the MARLIN traffic signal control system whose advocates claim it will offer a major improvement in traffic flow. This system has not been tested in a congested city environment like Toronto’s, only as a computer model. Even assuming that it would work as hoped once implemented in the real world, tweaking traffic signals may squeeze some capacity out of the street system, but it will do little for jammed roads, not to mention expressways.
Toronto faces difficult debates about how it uses road space for parking, deliveries, construction sites, pedestrians, cyclists, taxis, and public transit. A new traffic control system might contribute something, but pinning all hopes on that technology avoids harder questions about who should be on the roads to begin with. Actually tackling gridlock means that we begin to challenge decades-old assumptions about motorists and their presumed right to drive and park wherever they like as a matter of course. Stintz is silent on that issue.
Congestion is the direct result of years of ignored growth in travel demand and a failure to build transit alternatives to the automobile. Torontonians can hardly blame people for driving where transit is underfunded and inconvenient. This will not be reversed overnight. Latent demand and the growing population will soak up new transit capacity as fast as it appears on the streets.
Real improvement will require the commitment of revenue both to new transit projects and service. Pretending that this is possible simply by shuffling money between accounts and selling a major municipal asset continues the something-for-nothing claims so beloved of Mayor Rob Ford.
Stintz argues that Toronto must seek more money from Queen’s Park and Ottawa because Toronto cannot afford system rejuvenation on its own. However, when a subway plan is at stake, Toronto tax dollars magically appear. The combined value of the Scarborough Subway tax and the new Stintz Transportation Trust Fund could have paid for the TTC’s 10-year state of good repair backlog.
While she chaired the TTC, Stintz had her chance to improve transit, but instead chose to be sign on to the Ford administration’s approach, cutting service capacity and quality, not to mention capital projects for more buses and garage space. The focus turned to a few subway projects, and now Stintz would squeeze operating budgets, leaving council with no money for other transit improvements.
Stintz would strip operating revenues, leaving matching budget cuts for a future council, a move just as evasive as Ford’s claims that budget gravy that would pay for everything. And tactics like selling Hydro to build a subway can be repeated only if the City has a pool of truly surplus assets that it values less than whatever could be bought in trade. It does not.
Toronto hears a lot about sustainable budgeting, about repeatable year-to-year financing without creative accounting to avoid big tax increases. Karen Stintz’s financial hocus-pocus would make even Rob Ford blush.
Additional reporting by David Hains.