Thanks to the OneCity plan unveiled last week by councillors Karen Stintz and Glenn De Baeremaeker, the issue of targeted taxes for transit expansion has been plunked on the table.
It’s not that the city hasn’t recently used its limited revenue base to fund transit (it paid for enviro assessments for Transit City and the Spadina subway extension) it’s just that using municipal cash for TTC additions has generally speaking been a no-go.
So we owe a debt to OneCity for triggering the debate, even though its proposed funding model, the Current Value Assessment uplift (CVA), could very well die on the vine.
The CVA idea is that as properties go up in value, revenue from increased assessment will be diverted to transit. Normally, reassessment doesn’t lead to automatic tax increases.
In the OneCity plan, the CVA uplift (equivalent to a 1.9 per cent property tax increase) would be phased in over four years. That’s $45 more for the average house in the first year, and up to $180 more in year four, based on the average growth rates we’ve seen recently. The snag is, if these slow, the model could be in trouble.
Of course, there’s a big debate on whether the property tax, which already funds many services and represents only 5 per cent of the average total tax bill paid, is the best way to fund TTC improvements.
In Toronto, the average home valued at around $425,000 gets a $3,400 (or thereabouts) property tax bill, but in Mississauga a similar house is dinged about $5,700 and in Brampton $5,000, meaning T.O. taxes are a relative bargain.
But the biggest problem with CVA uplift is that it requires changes to provincial legislation that seem unlikely, given that the province isn’t supportive. While the legal changes could be sought as part of a revised City Of Toronto Act, the province has been reluctant to treat municipalities differently, and there’s no pressure for this from other areas.
Perhaps the solution is the simple 2 per cent tax increase OneCity suggests as its backup funding plan. That would (after four years of compounded 2 per cent increases) ultimately generate $250 million yearly for a transit expansion of around $7.5 billion over 30 years, with assessment growth included. One hiccup with both plans is that council can re-debate the CVA or a straight-on tax increase every year, which makes the entire proposition a little precarious, although legally binding contracts could prevent this.
Still, having the city fund transit expansion gives us local control over decisions and allows us to benefit from the TTC’s unparalleled experience in operations. Bringing money to the table would help check Metrolinx’s unilateral moves, which sometimes override the advice of the TTC and local councillors. The relationship between the TTC and Metrolinx needs to be an equal one if the dynamic tension between the two organizations and their respective expertise is to result in the best outcome.
As for the actual OneCity map, many of the proposed projects are essentially an amalgamation of previous proposals, including most of the Transit City lines, and as such are supported by studies, communities and politicians.
It’s no surprise, though, given the shifting plans, that the province refused to sign on. It already has substantial investment in T.O., including many Transit City light rail lines and a regional plan that envisions the Downtown Relief Line and a Yonge North subway extension.
Where OneCity really falls short is in budgeting for operating and capital funding for new lines once they’re built. Each new passenger requires roughly a $1 operating subsidy from the government and an additional $1.25 subsidy yearly for ongoing maintenance. Already, the TTC needs an additional $200 million per year above its current spending just to keep the system in its current less-than-ideal state. So even as we speak, the TTC is falling behind.
There are no combined estimates yet for ridership increases based on OneCity, but a cursory look at projections for individual lines suggests building even half the projects could easily increase TTC use by 100 million rides a year. That would require around $250 million in operating subsidies to run and maintain the lines, the equivalent of a 10 per cent property tax hike on its own.
OneCity, even if it wins support, will take a long time to realize and will require upgrades like signal priority for all transit vehicles and more buses and hours of service. Ultimately, just to meet existing needs and provide good service across the city, the total cost is about $70 mil a year more than the TTC now gets.
We can hope bipartisan support on council for OneCity will convince the traditionally cautious premier that he can support a plan to bring in new revenue tools like a sales tax premium, higher gas taxes, parking surcharges or even road tolls, all of which Metrolinx is due to report on in 2012. In that case, the plan’s breakthrough accomplishment would be the institution of new targeted taxes for transit.
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