Danforth Line 2 Scarborough Subway Extension

[TheTigerMaster]

The City can increase the special levy.

The City has a debt ceiling that it must adhere to. Committing more money to the SSE would, at best delay numerous other debt-financed infrastructure expansions by several years, or at worse put the City over the debt limit.

 

[micheal_can]

With what money though? People in this forum talk as if money is unlimited, or transit is the only priority. The Wynne government is trying to keep a somewhat balanced budget, while also bringing in some very expensive social programs, including at least some form of pharmacare. And in a battle for funding between SSE and Pharmacare, the SSE loses every time.

Of course, I don’t expect you to actually identify where the money will come from. But nevertheless, it rubs me the wrong way when people say the government will just add a major project onto their list of spending, as if Wynne can waive her wand a print money.

Anyways it appears that this government is putting an increased focus on social programs, and this is likely at the expense of potential transit spending. So I wouldn’t get your hopes too high for promises of additional spending on this project.

Ontario has been broke for over a decade. We just keep spending though.

There will be parties that will promise more, just to get elected.

The City has a debt ceiling that it must adhere to. Committing more money to the SSE would, at best delay numerous other debt-financed infrastructure expansions by several years, or at worse put the City over the debt limit.

The province and Federal governments do not have a debt ceiling.

 

[TheTigerMaster]

With what money though? People in this forum talk as if money is unlimited, or transit is the only priority. The Wynne government is trying to keep a somewhat balanced budget, while also bringing in some very expensive social programs, including at least some form of pharmacare. And in a battle for funding between SSE and Pharmacare, the SSE loses every time.

Of course, I don’t expect you to actually identify where the money will come from. But nevertheless, it rubs me the wrong way when people say the government will just add a major project onto their list of spending, as if Wynne can waive her wand a print money.

Anyways it appears that this government is putting an increased focus on social programs, and this is likely at the expense of potential transit spending. So I wouldn’t get your hopes too high for promises of additional spending on this project.

Also worth nothing that, for the past decade or so, whenever the City has requested funding beyond what as initially committed for Transit City, the Provincial response has been a consistent no.

 

[TheTigerMaster]

Ontario has been broke for over a decade. We just keep spending though.

There will be parties that will promise more, just to get elected.

I know it might feel that Ontario is spending like drunken sailors, but if you’ve been paying over attention the past few years, it should be clear that all Provincial funding has been adjusted in order to reach the goal of a 2018 balanced budget. The Liberals have been extremely disciplined in that regard, because they know they’d have electoral hell to pay if they didn’t pull off a balanced budget

So any additional spending on the SSE is going to come at the expense of something else. If the province is spending $1.5 Billion extra on this, then $1.5 Billion in spending will have to be cut elsewhere. It is a zero sum game. This assumes that the province wants to maintain a balanced budget for 2022, of course

 

[micheal_can]

I know it might feel that Ontario is spending like drunken sailors, but if you’ve been paying over attention the past few years, it should be clear that all Provincial funding has been adjusted in order to reach the goal of a 2018 balanced budget. The Liberals have been extremely disciplined in that regard, because they know they’d have electoral hell to pay if they didn’t pull off a balanced budget

So any additional spending on the SSE is going to come at the expense of something else. If the province is spending $1.5 Billion extra on this, then $1.5 Billion in spending will have to be cut elsewhere. It is a zero sum game. This assumes that the province wants to maintain a balanced budget for 2022, of course

Well, currently, the plowing on Northern highways have become a sad state of affairs. I guess they could stop plowing all together.

 

[Rainforest]

The City has a debt ceiling that it must adhere to. Committing more money to the SSE would, at best delay numerous other debt-financed infrastructure expansions by several years, or at worse put the City over the debt limit.

Levy isn't necessarily debt. If the levy collection period matches the construction period, then the collection will outpace the spending and no new debt will be created.

 

[AlvinofDiaspar]

Levy isn't necessarily debt. If the levy collection period matches the construction period, then the collection will outpace the spending and no new debt will be created.

If I recall the background correctly, the levy will last for 30 years. You really can't avoid the issue of having to raise the debt ceiling - but hey, subways cost money - something that the fiscons should know before they so cheerfully jumped into the fray.

AoD

 

[Rainforest]

If I recall the background correctly, the levy will last for 30 years. You really can't avoid the issue of having to raise the debt ceiling - but hey, subways cost money - something that the fiscons should know before they so cheerfully jumped into the fray.

AoD

Potentially, the collection schedule can be adjusted as well, to make sure the contracts are settled out of the current or previously collected revenue rather than new debt.

 

[AlvinofDiaspar]

Potentially, the collection schedule can be adjusted as well, to make sure the contracts are settled out of the current or previously collected revenue rather than new debt.

You are borrowing to the tune of 1B, you can’t collect the levy fast enough to settle for the contracts without bumping up the rate significantly. It wouldn’t have been spread out for 30 years otherwise. Anyways, there are no reasons why the ceiling can’t be raised other than optics.

AoD

 

[TheTigerMaster]

You are borrowing to the tune of 1B, you can’t collect the levy fast enough to settle for the contracts without bumping up the rate significantly. It wouldn’t have been spread out for 39 years otherwise. Anyways, there are no reasons why the ceiling can’t be raised other than optics.

AoD

But those optics do have real implications for our credit rating, and cost of borrowing.

 

[AlvinofDiaspar]

But those optics do have real implications for our credit rating, and cost of borrowing.

Does it? My impression is that the debt ceiling is more about optics than fiscal needs.

AoD

 

[TheTigerMaster]

Does it? My impression is that the debt ceiling is more about optics than fiscal needs.

AoD

I don’t know. I’m not a finance expert. But my understanding is that it’s supposed to demonstrate to lenders that Toronto is a disciplined borrower, which should lead to lower lending rates. Whether or not increasing the debt limit would actually have effects on borrowing rates is unknown to me.

In reality, I’m sure 80% of the purpose was so some politician back in the day could make a show of how fiscally responsible they are.

 

[rbt]

The province and Federal governments do not have a debt ceiling.

Sure they do. It's controlled entirely by private industry and other governments. There is a point beyond which the government will not be able to raise more funds.

We (as a country) are an awfully long way from that point.
https://en.wikipedia.org/wiki/List_of_countries_by_credit_rating

Ontario ratings are roughly on par with China, Taiwan, Ireland, Iceland, and Israel.

That said, I do wish we put more emphasis on fiscal ROI (or quality of life ROI) rather than political ROI for infrastructure.

It's actually personal debt that concerns me (credit card and short-term loans) rather than government debt. Our governments can survive years of below normal income but many individuals would struggle after just a couple months.

 

[steveintoronto]

[...]While the City of Toronto’s debt ceiling isn’t as well known, this little-discussed aspect of the budget affects which major projects the City funds. Capital projects range from building local community centres and libraries to replacing Toronto’s aging watermains—but council can’t take on infinite debt, and so it has to make choices to stay under its debt ceiling.

Here, we’ll outline how the debt ceiling works, and show what choices need to be made for the City to avoid their own Ted Cruz-style situation in a few years.


What is the debt ceiling, and how does it work? [...continues...]

https://torontoist.com/2015/12/like-the-debt-ceiling-cant-hold-us/
.

 

[syn]

Okay, fair enough. A 3-stop $5 Billion extension might be more palatable than a 1-stop $3.5 Billion extension that nobody really wants.

The extra funds to pay for that will probably fall solely on the provincial government (the City can’t and won’t pay for that). The province is also balancing numerous other transit priorities in the GTHA, in addition to the need to have a balanced budget or minimized deficit. Additionally, the SSE isn’t at all popular outside of Toronto, so announcing they want to spend more money on it won’t be received well by voters outside the city. Only time will tell if any of the parties believe supporting the three stop option is worth any of the potential risks.

Supporting the one-stop option, and covering the cost overruns, is the safe option for the provincal parties.

City Staff already have pointed out this one stop extension could exceed $5 billion - the three stop solution back in 2016 was priced at $4 billion (which is what the current one stop extension is now close to), which is why they abandoned the idea. At the rate the cost for this thing has increased, I can't see a 3 stop plan costing anything less than $6 billion.

Something cost effective might be possible if they put it all above ground. I'd rather see three stops above ground instead of one long underground tunnel.

I do agree regarding spending - we can't spend $4 billion - $5 billion on a one stop extension, then spend billions more on LRT lines in Scarborough (not to mention Smart Track) - there are too many other areas of need in the city.