New Transit Funding Sources

[gweed123]

Just had a thought: What about the possibility of introducing a 10% "Flex Fund" into the equation? Basically, what this would be is a general fund that would be used "for local transit projects that are deemed to have a regional significance". A general booster fund for important projects that don't quite have enough funding from their set municipal allocations.

This would decrease the amount of money available to each of the municipalities, but could potentially be used as extra revenue for projects like the DRL, which certainly have a regional significance. My only worry is that doing something like this could lead to complaints of favouritism towards certain municipalities. When it's simply divided up based on population, at least it's transparent and equitable.

 

[BurlOak]

Ok, so I did some number crunching. I took the total GST revenue amount from the 2012 Budget and did some math to figure out that if the GGH extended area is used (http://en.wikipedia.org/wiki/File:Map_of_Ontario_GOLDEN_HORSESHOE.svg), it would generate $1.4 billion per year in 2012.

I am wondering about the change from GST/PST to HST. an extra 5% was added to services in Ontario that were not taxed before. Is any portion of this going to transit or just "general revenue" - I imagine it is quite a lot of money.

And that is one problem - will people believe that this tax will be dedicated to transit when so many other taxes have just gone into general revenue.

 

[rbt]

And realistically, even if we only get $30 billion over the next 25 years, we'll still be significantly ahead compared to what we've achieved over the previous 25 years.

I'm not so certain of that. Things which have been funded over the last 25 years that this new fund may be used for:

* subway car replacements (both the Toronto Rocket and T1 orders)
* streetcar replacement
* thousands of buses (TTC, GO, and other agencies)
* Eglinton/Sheppard/Finch LRT and SRT rebuild
* Downsview and Spadina subway extensions
* Sheppard Subway
* numerous GO projects
* Union Station Second Platform, GO shed, and station rebuild
* Yonge Line Signalling system, electrical system rebuild, etc.
* various LRT track rebuilds
* VIVA, Züm, Mississauga BRT, and similar

These all add up to at least $15 Billion in todays dollars.

If you take $30B over 25 years with a discount rate of about 7.5% for inflation (construction inflation runs between 5% and 10%) and you get pretty damn close to $15B in todays dollars. Most of the $30B is backloaded because of an assumption of inflation which increases sales tax revenue.

If we put into place the sales tax and immediately remove all currently existing capital funding (extremely likely situation) then we have roughly the same outcome but it is much more preditable.

It's not all bad. A huge chunk of what has been funded over the last 25 years is not yet complete. So it counts against the funding pool but we haven't seen the impact yet.


Now, if you can put into place the Sales Tax and maintain todays SOGR funding for things like rolling stock replacement, track rebuilds, etc. then you've got something. I don't think that will happen though. I would be really surprised if a large chunk of the annual revenue didn't go into operations subsidy by the end of the 25 years.

MTA appears (I'm not certain I read their budget correctly) about half of their Toll and Other revenue (includes 0.3% sales tax) into operations and the other half goes into what might be called SOGR work like replacing rolling stock, signalling upgrades, garage, etc.

 

[nfitz]

I am wondering about the change from GST/PST to HST. an extra 5% was added to services in Ontario that were not taxed before. Is any portion of this going to transit or just "general revenue" - I imagine it is quite a lot of money.

I'm not aware of anything that the extra 5% GST was added to after the 5% GST and 8% PST were merged into the HST. As far as I know, what is subjected to the 5% tax is the same in every province.

Now there are products that are now subjected to the 8% portion of the HST that weren't before (such as gasoline). And that goes into general revenue. But at the same time, the province now provides significant input tax credits to those collecting HST, to cover the HST they pay on their inputs. So while revenue has increased in some areas, it has decreased in other areas. As far as I understand, it was supposed to be relatively neutral, or only slightly positive.

 

[BurlOak]

I'm not aware of anything that the extra 5% GST was added to after the 5% GST and 8% PST were merged into the HST. As far as I know, what is subjected to the 5% tax is the same in every province.

Now there are products that are now subjected to the 8% portion of the HST that weren't before (such as gasoline). And that goes into general revenue. But at the same time, the province now provides significant input tax credits to those collecting HST, to cover the HST they pay on their inputs. So while revenue has increased in some areas, it has decreased in other areas. As far as I understand, it was supposed to be relatively neutral, or only slightly positive.

Oops, you are correct, I wrote 5% instead of 8%.

It would be interesting to see what the actual accounting would say. I imagine that it will not wind up being revenue neutral in the end.

When the GST was brought in, it replaced the Manufacturers Tax that varied from 0 to 13%, and was added to services. First it was expected to be revenue neutral at 9%, but implemented at 7%. This turned out to be a huge cash cow as well that helped supply "general revenue".

 

[M II A II R II K]

I still say have the TTC expand into the for profit development business particularly on the new routes it would create and have a source of revenue to pay for it and more importantly less dependent on politicians.

 

[gweed123]

Ok, this is going to be a long post...

I modified my formula, and incorporated the suggestion of using a metric based on ridership. What I found when I did JUST ridership is that Toronto got nearly all of the money, and left almost nothing for any other project, aside from portions of a couple 905 BRT projects.

So what I decided to do was have 50% of the funds divided up based on ridership, and 50% based on population. The end result is what I think is a pretty nicely balanced funding scheme, where most of the Priority Projects get around the right amount of funding they need in order to go ahead inside of a 10 year timeframe.

Here's what it ends up being:

GO Transit: $243.83 million/year
Toronto: $604.74 million
Durham: $41.19 million
York: $94.57 million
Peel: $105.34 million
Halton: $33.14 million
Hamilton: $43.12 million

What I did then is I figured out what each region's "Priority Project" is, and figured out how whether or not the amount being raised for that region will be enough to cover the cost of that project over a 10 year period. The surplus/deficit is shown in the legend on the map.

Here is a map of the Priority Projects overtop of the existing, under construction, and funded transit lines. This does not show anything other than what can be funded using the Regional Transportation Sales Tax (RTST) within that 10 year period. The long-range projects and supplementary projects aren't shown.

https://www.dropbox.com/s/918o98b8b7csgug/PriorityProjects.jpg

 

[gweed123]

You imbedded a 4 MB JPG - and off a particularly slow server? Not opening on my computer (well, the top 1/3 maybe). Might work better without an airphoto in it ...

Yeah, I'm trying to get the image size down... The server is also having problems, so I'm working on that too. Unfortunately the UT upload doesn't work well with large files, it makes the map so small that it's unreadable.

EDIT: I've uploaded some of my larger maps this same way and haven't had a problem, so I'm trying to figure out what's going on this time.

 

[gweed123]

Ah, I see you'd removed the imbedded image 9 minutes before I commented (I'd still only got about 30% of it after over 9 minutes!).

I gave up on my server and just uploaded it via dropbox. I checked it and it worked fine for me. Let me know if it still doesn't work.

EDIT: The colour looks a bit off, but oh well. If you download it the colours turn out right and you can zoom in more.

 

[gweed123]

For those interested, here's a Pie Chart of the funding percentages.

 

[gweed123]

Toronto's CFO released a report today on revenue generation strategies.

Their $1.3 billion for a 1% RTST wasn't that far off from the $1.165 billion I had projected based on the national GST amounts. Personally, here's the strategy that I'd like to see:

-A 1% Sales Tax and a region-wide VRT and Parking Levy to cover capital expenses (total $2.68 billion)

-Road Tolls to cover operational expenses, to be implemented once GO REX is implemented ($1.5 billion).

http://www.toronto.ca/legdocs/mmis/2012/ex/bgrd/backgroundfile-50609.pdf

 

[rbt]

Toronto's CFO released a report today on revenue generation strategies.

I was expecting a Toronto oriented plan to cover the things not on Metrolinx's list (Queen's Quay East for example). This looks like a list of revenue sources that Metrolinx could implement and do things with.

 

[gweed123]

I was expecting a Toronto oriented plan to cover the things not on Metrolinx's list (Queen's Quay East for example). This looks like a list of revenue sources that Metrolinx could implement and do things with.

At least it shows that Toronto and Metrolinx are actually on the same page with something. The more municipalities that are asking for these revenue sources, the more likely they are in coming to fruition. The last thing we want is a fight between the municipalities and Metrolinx over whether or not addition revenue streams should be brought online.

 

[rbt]

At least it shows that Toronto and Metrolinx are actually on the same page with something. The more municipalities that are asking for these revenue sources, the more likely they are in coming to fruition. The last thing we want is a fight between the municipalities and Metrolinx over whether or not addition revenue streams should be brought online.

True and it is good.

I'm just disapointed because I thought the report was supposed to be about how TTC could close the gap on smaller projects which don't appear in Metrolinx priorities because they're not inter-regional.

 

[BurlOak]

Toronto's CFO released a report today on revenue generation strategies.

Their $1.3 billion for a 1% RTST wasn't that far off from the $1.165 billion I had projected based on the national GST amounts. Personally, here's the strategy that I'd like to see:

-A 1% Sales Tax and a region-wide VRT and Parking Levy to cover capital expenses (total $2.68 billion)

-Road Tolls to cover operational expenses, to be implemented once GO REX is implemented ($1.5 billion).

http://www.toronto.ca/legdocs/mmis/2012/ex/bgrd/backgroundfile-50609.pdf

I am not sure what the statement "15% or revenues are remitted back to local municipalities" means.

Does this imply that Municipalities get 15% of the money for operating costs, minor capital improvements and major rapid transit lines. Or would the major projects like Transit City and DRL get additional money.