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TTC's $1B shortfall

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billonlogan

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TTC's $1B shortfall
Transit exec: Province is 'absolutely' screwing T.O.
By ROB GRANATSTEIN, CITY HALL BUREAU

The TTC is rolling toward a $1 billion cash crisis.

Changes in the provincial funding formula, requests to speed up the purchase of new streetcars, fixing up the Scarborough RT line, ensuring there are enough buses and questions about federal funding have left the TTC facing a huge hole in its five-year capital budget.

"The funding requirements for transit are stupendous," said city budget chief David Soknacki.

Funding the TTC is already set to be the biggest requirement in the city, and that's before the extra $1 billion cash call emerged, Soknacki said.

"The city made basic assumptions with federal and provincial programs continuing," he said. "But they're not."

Soknacki said the TTC made commitments to buy buses based on the existing provincial funding. Now that it's changed, the order can't be cancelled and the money may have to come from the fare box or property tax bills.

TTC chief financial officer Michael Roche said when the province cancelled its Ontario Transit Vehicle Program, $331 million disappeared.

The OTVP gave the city money for replacement vehicles.

Starting in 2007, Roche said, the money will only be available for bus purchases, not trains, streetcars or the Scarborough RT fix that will be necessary soon.

TTC vice-chairman Adam Giambrone was asked yesterday if the province was screwing the TTC.

"Absolutely," he said.

RIDERSHIP GROWING

Giambrone said talks between the province and the city continue, but without a change, the TTC will be leaving people at the side of the road because ridership is growing by more than 10 million rides a year.

Roche said the other problem is the TTC is trying to build for the future, too -- and that costs more.

Part of that is buying new, low-floor streetcars. The TTC is speeding up the purchase of 64 new streetcars. The total cost is the same, but the bill comes sooner.

It also has to replace the aging Scarborough RT line, where the cars won't work by 2015. Fixes to the system, from replacing the cars to building a Scarborough subway system, could cost between $360 million to $1.2 billion.

"The money isn't necessarily here," Roche said.

The TTC entered the five-year plan with a $319 million shortfall, but hoped to fill it with money left over from 2005 and new federal government money.

It is hoped a deal with the federal government will be signed soon, pumping millions into the system, but Roche doesn't know how much Toronto would get.

The other problem is the $1 billion hole doesn't include any city money for the extension of the subway to York University announced in the last budget by the province.

money may have to come from the fare box or property tax bills......TTC entered the five-year plan with a $319 million shortfall.....hoped a deal with the federal government will be signed soon, pumping millions into the system....doesn't know how much Toronto would get.
I sense a bigger property tax increase, increase in service fees, parking permits and TTC fares for next year and beyond?
 
I sense a bigger property tax increase, increase in service fees, parking permits and TTC fares for next year and beyond?

I predict that Miller won't dismiss road tolling or other controversial revenue generating ideas, unless Pitfield somehow gets a huge surge of support soon.
 
For those wondering what got raided to pay for Sorbara's subway to Highway 7 - there's the answer.
 
Is it every year, its either the city or the TTC, or both? Well, I guess they are related parties.
 
Here we go again. Is it just me, or is this getting really tiresome? I mean, provide appropriate funding, vote in other politicians who will fix things, or just let the system crumble! I mean, enough with the "CRISIS" already!!!

Then again, the Star needs something to print. :rolleyes
 
The current city council seems to have a problem adding. Every year they can't balance the budget and then talk about great strategies for civic improvement like city-wide cycling plans, complete landfill diversion, transit growth strategies, the grand new Union Station, etc but then reality is something quite different. Now TTC is in a $1 Billion shortfall after new money came as compared to the few years following the Harris government. The province didn't give some $331 Million disappear and somehow that equals a $1 Billion shortfall?

The other problem is the $1 billion hole doesn't include any city money for the extension of the subway to York University announced in the last budget by the province.

What's the problem? If there is no money to build it then simply don't build it. I have a $9,000 shortfall on my planned new home entertainment system... whatever will I do? This city council seems to have a hard time facing the reality it exists in. I can understand complaining about the lack of money available but the lack of money should result in budget changes that balance the budget rather than a city council that looks like they showed up at the cashier to pay for a day of shopping with only a couple of dollars in their wallet. Running the city is about making difficult decisions and the city has two options... tell its citizens a service will be cut or tell citizens a service will be paid for with tax hikes. It can't just come back year after year looking like people that did budget planning on a broken abacus.

Toronto is paying one of the lowest residential tax rates for cities in the province. The argument can be made that many are property rich but not cash rich but at the same time there are many living outside the city who would love to live in the city but can't afford the property. Maybe there should be a system where property taxes remain at a level stable with national inflation but then a tax gets levied on sale of the property equal to the underpayment of property tax all those years based on the sale price and an averaged property value growth rate?
 
The problem is not with the province, it is with the city because it is only using the gas tax from province to reduce its own subsidy of the TTC. In the next five years, Toronto will receive $162 million from the province each year from the gas tax, for total of $812 million, more than double what the city would receive from the Transit Vehicle Replacement program, and alone is almost enough to cover this $1 billion dollar shortfall, if it exists. If the city of Toronto actually let the TTC use this money there would be no problem, but it won't because it only cares about low taxes and the police so the TTC is screwed and that is not the province's fault.
 
doady - the province didn't promise either/or, it promised both.
 
Can you prove to me that they promised both? The OTVP was never mentioned, so I doubt you can find a quote. Point is, thanks to the Liberals the TTC's financial situation is much better today, even though the transit vehicle replacement funding has been taken away.
 
doady - the TTC thought it was getting both and budgeted accordingly. The province didn't mention gas tax replaced OTVP because that would have taken the gloss of the "extra" money.

Steve Munro is far more current then me on this:
www.stevemunro.ca/?p=176
 
The TTC can budget for whatever they want. That doesn't mean that the province budgeted for it or made a commitment. The TTC can, and does, budget for all kinds of commitments that have never been made.
 
doady - the TTC thought it was getting both and budgeted accordingly. The province didn't mention gas tax replaced OTVP because that would have taken the gloss of the "extra" money.

As I said before, the city is only using the gas tax to reduce its own funding of the TTC, so the TTC doesn't see any benefit. That is why the shortfall is so large in the first place. I am not saying I agree with the Province's cancellation of the OTVP, but a loss of $332 million of funding doesn't explain why the TTC is short $1 billion.

Steve Munro is far more current then me on this:
www.stevemunro.ca/?p=176

C'mon that guy doesn't know what he is talking about.

He claims that OTVP can be used to buy growth buses, which is not true at all. OTVP only pays 1/3 of the costs of replacement buses. Most transit systems are using the gas tax to pay for the growth buses.

Speaking of the gas tax, why doesn't this Steve Munro mention it at all? If you are going to compare the $3.4 billion that province will spend on roads and highways in the next five years to the amount of money that it will spend on public transit, you'd think that $1.5 billion in gas tax funding would be mentioned in there somewhere, right?

edit: sorry my mistake
 
As I said before, the city is only using the gas tax to reduce its own funding of the TTC, so the TTC doesn't see any benefit.
Can you please show the specific budget impact of this?

2006 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm
2006 Operations:
www.ttc.ca/postings/gso-c.../_conv.htm
2005 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm
2004 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm
2003 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm
2002 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm
2001 Capital:
www.ttc.ca/postings/gso-c.../_conv.htm

I can see where the city has dramatically boosted spending in 1999 onward, a really big increase for 2001 and only 2001, and how the city has been borrowing capital funds recently, but I don't see how they have reduced their transit capital contributions.

Keep in mind the province started forcing a Go Transit capital contribution when the gas tax arrived -- that's why I say transit capital contributions instead of TTC capital contributions.
 
Between 2005 and 2006, the city of Toronto reduced its own subsidy of the TTC capital costs by around $90 million, despite an increase of $167 million in the costs.

Also in 2004, the city started using $70 million of the Provincial gas tax to reduce its subsidy of the TTC operating costs. In 2004 the city contributed $131 million to the operating costs of conventional transit, compared to $196 million in 2003, a decrease of $65 million. Remember this when the TTC decides to raise its fares yet again.

And even if you do not consider the one-time grants that the Province occassionally gives to the TTC and only the TTC (including $200 million this year for subway operations), the city of Toronto only provides around as much subsidy per capita for the operation of transit as Mississauga or York Region does (a lot less this year).
 

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