Transit in the upcoming Federal election

[kEiThZ]

The top 35 American cities receive 8% of their annual operating revenue through transfers from the federal government. Toronto and other Canadian cities receive about 2%. This is a problem.

But this goes to a philosophical issue. Why does the federal government need to be treated as a cash cow? There is absolutely nothing stopping the provinces from providing more revenue for cities or empowering cities to raise additional revenue.

This comes up every election...and to me it smacks of passing the buck. Municipal politicians who don't have the courage to jack up property taxes or (demand the right to) levy sales taxes and/or other fees, then start demanding the feds solve their problems. Just look at the GST cut and Miller's two cent campaign. He targetted the feds because it was easy. Why didn't he target Queen's Park and insist that the province jack up the provincial sales tax by 2% (or give cities the right to levy it) and hand over the revenue to the municipalities?

And the public is fully complicit in this problem. We've just had a municipal politician who got elected in part, on a promise to can new fees and taxes. Ultimately, people get the government (and services) they deserve.

Lastly, the US is certainly not a good model to follow. Just look at the mess their municipalities are in (or will be) because of the fiscal troubles of their states and federal governments. The best thing to do is to encourage less dependency on other levels of government, not tie a municipality's future to their fates.

 

[GraphicMatt]

I'd agree with you if we had a low federal income tax rate, but about half of every tax dollar you or I pay goes to the federal government. We don't see much of that back, unless we happen to host a major sporting event or live in a contested riding. I'm not asking for direct federal involvement in municipal issues but rather greater transfers to the provinces or direct to municipalities.

Also, I think it's kind of a stretch to say that the U.S. has problems because they fund their cities too much. The problems down south aren't about too much government spending but rather a financial crisis driven by unregulated markets that essentially tanked the economy and took a vast swath of jobs with it.

 

[doady]

But this goes to a philosophical issue. Why does the federal government need to be treated as a cash cow? There is absolutely nothing stopping the provinces from providing more revenue for cities or empowering cities to raise additional revenue.

Yes there is something that stops provinces from providing more revenue to cities. It's called the federal government. The Feds can cut funding the provinces, which they did in the 90s, and force provinces to cut funding to municipalities, which they did in the 90s.

They Feds are key for properly funding municicpalities. The under funding of municipalities starts with them.

 

[kEiThZ]

I'd agree with you if we had a low federal income tax rate, but about half of every tax dollar you or I pay goes to the federal government. We don't see much of that back, unless we happen to host a major sporting event or live in a contested riding. I'm not asking for direct federal involvement in municipal issues but rather greater transfers to the provinces or direct to municipalities.

This right here....it's a huge perception problem. Sure, half goes to the feds. And massive amounts come back in health and social transfers. We already have huge amounts transferred back to the provinces. Not to mention direct transfers to individuals through various social programs like EI. That's the reason the feds take in so much revenue. It does not mean they have cash to spare or that they should necessarily get themselves even further involved in running the lowest levels of government.

I don't get how people dissociate the two. Everyone gets up in arms about how much the feds take in. But they conveniently forget how much the feds pay out.

Then there's the argument about fairness for Toronto. I am sympathetic to the argument...to a point. Large urban areas the world over will always have a "fiscal imbalance" with federal governments. This is true for London and New York and Paris as well. Is Toronto's case worse? Sure. But it's not exceptional. That said, this is still not an argument to get the feds involved in public transit. Given Canada's regional dynamics, this would make things worse, not better. Flin Flon might well end up getting priority over Rexdale. Get the Feds involved in transit and you'll create another excuse for them to transfer revenue away from Toronto. Far better for them to keep their noses out of it.

Also, I think it's kind of a stretch to say that the U.S. has problems because they fund their cities too much. The problems down south aren't about too much government spending but rather a financial crisis driven by unregulated markets that essentially tanked the economy and took a vast swath of jobs with it.

I never said that the problems in the US are caused by funding cities too much. I said it's dangerous for municipalities to tie themselves to higher levels of governments. Because when those governments are strapped, muncipalities suffer. Compared to what's going on in the US (municipalities contemplating nearly complete transit shutdowns), Toronto's problems seem relatively minor...and we've made through the great recession, largely because Toronto is not dependent on the province or the feds to the same extent that US municipalities are. Just imagine....what if Toronto had fiscal independence. Miller was kind of getting there. But if Toronto pulled it off. It would have been even more isolated from the recession.

Oh...and the US federal government doesn't have a spending problem in so much as they have a revenue problem. Just two line items (social security and defence) exceed the entire federal revenue base. And for the lefties in the crowd, defence will be replaced in that equation by medicare, in the years to come. They clearly need a national sales tax. It's just a question of how bad things get before they finally succumb to the inevitable. In the meanwhile though, you just watch what happens to all that federal money going to American municipalities over the next few years. And then watch the trouble those municipalities will be in; because they won't want to raise property taxes or local sales taxes.

 

[kEiThZ]

Yes there is something that stops provinces from providing more revenue to cities. It's called the federal government. The Feds can cut funding the provinces, which they did in the 90s, and force provinces to cut funding to municipalities, which they did in the 90s.

They Feds are key for properly funding municicpalities. The under funding of municipalities starts with them.

Again. Passing the buck. What's stopping the provinces from raising taxes to make up for the federal shortfall? Just because politicians of a certain level of government don't want to face the wrath of voters, does not make it excusable for them to demand that the next higher level of government hand over revenue at the expense of that government's business.

 

[doady]

Again. Passing the buck. What's stopping the provinces from raising taxes to make up for the federal shortfall?

What's stopping the Feds from raising taxes to make up for the federal shortfall?

Just because politicians of a certain level of government don't want to face the wrath of voters, does not make it excusable for them to demand that the next higher level of government hand over revenue at the expense of that government's business.

So you're saying that it's excusable for the Feds to cut funding but inexcusable for the Provinces to cut funding? Your argument makes no sense.

 

[kEiThZ]

What's stopping the Feds from raising taxes to make up for the federal shortfall?

What federal shortfall? Since when does the federal government have an obligation to fund transit? Or for that matter any program? Constitutionally, the federal government is solely responsible for matter that impact the whole country or issues external to it.

Simply because people think the feds should fund transit does not necessarily mean that the feds have incurred an obligation they are not fulfilling and by extension have a funding shortfall. That's nonsense.

So you're saying that it's excusable for the Feds to cut funding but inexcusable for the Provinces to cut funding? Your argument makes no sense.

When they have/had a deficit. Yes. The federal government has no obligation to raise funds for other levels of government who have their own powers to raise revenue. The only reason provincial and municipal politicians raise a fuss, is because they don't want to have to raise taxes and incur the wrath of voters, themselves.

Heck, TO could fully fund a subway construction program if it really wanted to. Transit City at 12 billion was only 33% more than the city's annual budget. Spread out over a decade or more, a 15% property tax hike could have easily paid for Transit City. But which Mayor would have the balls to jack up taxes that much (on top of other requisite tax increases)? And no Ontario mayor would complain about the province (which holds the purse strings)....so they complain about the feds.

Insofar as the feds fund programs, they do so, to have a say in how those programs are run (and to ensure a roughly equal national level of service...ie health care). That's entirely reasonable. I see no reason, for the feds to take on additional obligations, when they can barely do anything right with the responsibilities they have at the present. Nor would I want feds having a say in transit in Toronto. With their dollars, will come their input. You can bet that if the feds get involved, every subway extension will be suburban and Peterborough will get GO rail service before TO gets a DRL.

 

[nfitz]

What federal shortfall? Since when does the federal government have an obligation to fund transit? Or for that matter any program? Constitutionally, the federal government is solely responsible for matter that impact the whole country or issues external to it.

Which is why healthcare - and transfer funds to the provinces to pay for healthcare - are entirely voluntary by the federal government. It's traditionally an area that's 100% provincial responsibility.

However Canada has long-since decided that Health Care was important enough that it become a federal issue, with federal funding. The same could happen to Transit.

Though the opposite might also happen. The Conservatives have long wanted (well, since they stopped being Progressive) to get the federal government out of the areas where they have no requirement to be in - I'd expect that if they were elected to a majority there's be a big push to eliminate federal funding for health care, and end the requirement that it be universal (the only stick they really have to enforce this is $).

 

[GraphicMatt]

Saying that the federal government has no obligation to fund transit (ie. infrastructure) is true technically, but the reality is that they DO fund infrastructure projects. They just do so on a complete ad-hoc basis and in ways geared toward gaining political support in certain areas.

Around the world, federal governments are involved in funding transit projects. We've fallen behind at least partially because ours doesn't.

 

[nfitz]

In the USA the federal government has no obligation to fund Interstate highways.

 

[Dan416]

The federal government is involved in airports/aviation, so why not transit?

 

[nfitz]

The federal government is involved in airports/aviation, so why not transit?

Because our constitution gives the federal government authority on inter-provincial travel. Apart from in Ottawa, transit isn't inter-provincial travel.

So to force federal involvement, perhaps the City of Toronto should form it's own province!

 

[Dan416]

Because our constitution gives the federal government authority on inter-provincial travel. Apart from in Ottawa, transit isn't inter-provincial travel.

So to force federal involvement, perhaps the City of Toronto should form it's own province!

Or, you know, constitution be damned (not that the Conservatives give a sh!+ about the constitution anyway) and do it because it's right.

Just like there should be a national securities regulator, there should be a national transit strategy.

 

[kEiThZ]

Which is why healthcare - and transfer funds to the provinces to pay for healthcare - are entirely voluntary by the federal government. It's traditionally an area that's 100% provincial responsibility.

However Canada has long-since decided that Health Care was important enough that it become a federal issue, with federal funding. The same could happen to Transit.

And what are the transfer payments for? Canadians forget their purpose so easily. The entire purpose of transfer payments is to prevent a large disparity in the quality of public services from province to province, that might result in large migrations by people seeking to access said services. ie. If Ontario had the best health care, we would end up drawing every person with a long term illness in the country. There's a purpose, rationale and national objective in funding health care across the country. And that too, all the feds do is equalize services across the board. The bulk of funding for health care still comes from the provinces.

What is the national imperative in public transit? Is somebody going to move to Toronto from Moncton because there's more subways or LRTs in Toronto?

Though the opposite might also happen. The Conservatives have long wanted (well, since they stopped being Progressive) to get the federal government out of the areas where they have no requirement to be in - I'd expect that if they were elected to a majority there's be a big push to eliminate federal funding for health care, and end the requirement that it be universal (the only stick they really have to enforce this is $).

The Liberals talk a big game. But they weren't that far off the Conservatives in practice either. And this goes back to the argument I'm making. The Canadian context is vastly different. Our government structures are different from say those in Europe. See below.

Also, once you let in federal dollars, you will have to accept federal input. You could well have bureaucrats raised in Wawa, ON, working in Ottawa, deciding where new subway lines will go and which contractor in Fredricton will get the rail ties contract. There is no way the federal government can just turn over funds. If they get that involved in transit, the are legally mandated to be that intrusive. Just look at defence projects for example.

Saying that the federal government has no obligation to fund transit (ie. infrastructure) is true technically, but the reality is that they DO fund infrastructure projects. They just do so on a complete ad-hoc basis and in ways geared toward gaining political support in certain areas.

Around the world, federal governments are involved in funding transit projects. We've fallen behind at least partially because ours doesn't.

Except that government structures are different around the world. There is no real equivalent to our provincial level of government in the UK or France for example. So in reality, their federal governments tend to fulfill roles undertaken by both our provincial and federal governments. They don't have the same constitutional (or traditional) division of responsbilities like we do.

Also, it's not like the feds don't fund infrastructure development. They just fund projects which are politically convenient (which by the way is a practice of both the Liberals and the Conservatives). And this is exactly why they shouldn't be in the infrastructure business to begin with. Because they are involved, provinces take a back seat and abdicate their infrastructure responsibilities. So now you have the federal government building daycares, highway off-ramps and subway lines. Ridiculous. They should be out of this business, vacate the tax room from their reduced involvement and give the provinces the room to raise the necessary revenue and tackle infrastructure as a core priority. This is why I argued that the provinces should have the testicular fortitude to take up the 2% in sales tax room vacated by Ottawa.

What makes a mess of things, is having bureaucrats in Ottawa having to decide the relatives merits of a daycare in Flin-Flon over platform upgrades at a Toronto Subway station. And there's no way to get around this. Transit maybe important to urban geeks on UT. But it's not the only priority for the general public. Who's to say that a new hospital in Kamloops, is less important than one more subway stop on Sheppard? This is why infrastructure concerns should be handled by governments lower down the food chain.

 

[kEiThZ]

In the USA the federal government has no obligation to fund Interstate highways.

And they were initially built as part of a strategic network with significant defence considerations, not in the least, being concerns about the mobility of ballistic missiles. And then there was the make work attribute of the scheme. etc.

Since then, one clue as to why they are federally funded, should be the name: interstate. They exist to tie the country together and that's why they are a federal responsibility.

Even in the USA, the vast majority of transit funds don't come from the feds but the state governments.