The options don't look good.
Kathleen Wynne announced this morning that the Province would deny Toronto City Council’s request to implement road tolls on the DVP and Gardiner.
In lieu of the ability to toll the two urban highways that the Province downloaded onto the City’s balance sheet, Wynne announced today that gas tax funding would be increased starting in 2019, a year after the next election. By 2022 gas tax funding would double 2017 levels, which would generate $170 million in additional revenue for Toronto.
This compares to the revenue a $2-toll on the Gardiner and DVP was projected to produce. However, at least 70 per cent of that revenue would be needed to pay for the cost of tolls and the controversial East Gardiner “Hybrid” plan.
That leaves very little in the way of additional funds for the City to tackle its $33-billion backlog of approved-but-unfunded capital projects, let alone addressing its ongoing operating budget challenges.
Even if road tolls were ever implemented, they would only make a small dent in this much larger problem.
There are a couple of options for what could happen next:
The gas tax increases, and Council shrugs
Council could react by washing their hands of this problem, and just saying that they received replacement funds through the gas tax. This could create a couple of problems. Because the funds don’t kick in until after the 2018 provincial election, there’s a risk that if a new government comes in, this promise will be forgotten. There’s also the risk that the Liberals could win office, and not follow through on this promise. After all, they pulled some funding on Transit City before Rob Ford took office, and hung John Tory out to dry on road tolls—a promise that relies on provincial funding tomorrow does not mean it will actually come.
Gas tax doesn’t come through, Council does nothing, blames the Province
This is a highly likely possibility, because it is very easy and costs nothing. It’s true that it wouldn’t actually solve Toronto’s myriad revenue problems, but the political optics would be good for councillors looking to show voters that they’re fighting on their behalf.
Council pushes for alternate revenue tools
Backing road tolls as a revenue tool was a big step for a council that rarely shows political courage. Beyond road tolls, only a sales tax, local income tax, or parking levy could generate revenue that’s comparable or greater. The Liberals have already said no to a sales tax, a local income tax would face similar political problems (and could be a logistic nightmare to collect), and a parking levy faces substantial opposition from Toronto businesses. Given the rug was pulled out from under them on road tolls, it might be even more difficult for Council to go out on a limb next time, given that the Province might not have their back. That creates a tough situation, because slaying the massive infrastructure deficit without one or more of these revenue tools will be a big challenge.
Council increases property taxes to offset revenue challenges
If you’ve followed council the past few years, you know this scenario is unlikely. Sure, councillors could say, “This is the Kathleen Wynne road toll tax, sorry about it,” but they probably won’t. It has become taboo at Council to suggest increasing property tax revenue above the inflation rate, and that consensus shows no signs of changing even though local property taxes are low relative to other Ontario municipalities.