Ontario Budget Cut and Transit Expansion

[Mapleson]

While I agree the TTC is chronically under-funded and is not keeping pace with demand, I do believe -- like with all things -- that there is a breaking point. A point at which, a solution will be found when push comes to shove. Markets and people have a funny way of solving problems when faced with adversity. Political will is found to undertake things when the going gets tough.

I think that the TTC is sort of in that "good enough" phase for people. Everyone knows the TTC is kind of crap compared to other transit systems in the world; it's still using tokens instead of smart cards, there hasn't been much investment in new subway lines in decades except for the Line to Nowhere(tm), etc.

What I do know is, that having a collapse of government finances would be far more painful than having a below-average transit system. I'd prefer to fix the problem without putting government finances in jeopardy. That means convincing the public to accept higher costs, and perhaps extend special consideration to low-income people (perhaps a re-imbursement program of part of the fare). But I think a significant fare hike should be on the table. And even congestion taxes like in Stockholm and London.

I happen to be a fan of user fees.

Generally, when things reach a breaking point it's more expensive to fix them than if you had acted with forethought. I would agree the TTC is still in the "good enough" phase, but as you can see from the interest in this forum, a growing part of the public feel that it's exiting the "good enough" phase. I'm a young professional myself, so I am concerned about when I'm in my 50s in the 2030s and the state of the city/provience/country will be in then.

A collapse of government finances is much less likely than cronic congestion. Look at how badly Greece messed up their finances and still gets bailed out by the brotherhood of nations. Canada is too economically integrated into the US economy to be allowed to collapse for the same reasons Germany couldn't allow Greece to do so.

I'm all for fixing government finances, but a tranportation/transit discussion board isn't where I'd do it and blaming infrastructure is not how I'd do it. You can expect less than two years worth of healthcare funding put towards infrastructure in your lifetime. I don't see you advocating a system of healthcare where users pay direct costs.

The world isn't locked into a dualistic choice. Debt isn't universally good/bad. Deficit spending isn't universally bad/good. If you can accept those statements, then we reach the reality of economic decisions tainted by political factors. In my ideal world, all taxes relate to a specific service would be elective and price at cost per capita. I hold as much hope of this occuring as I dread a forthcoming fincial collapse.

Not necessarily, if a "Province of Toronto" where to happen, the debt would be divided; For example, any debt associated with Spadina subway expansion would make "Province of Toronto" libialy because it falls in their region. Lenders can't come after the "Province of Toronto" just because of "WhatsleftofOntario" GDP isn't good enough for them, and vice-versa.

Good luck on identifying anything approaching a line itemization of debt. In theory, Ontario is still carrying debt from 1872 and we've only been paying the interest. It will be a political compromise if anything and Ontario would want to be compensated for the loss of net revenues.

 

[brockm]

Canada is too economically integrated into the US economy to be allowed to collapse for the same reasons Germany couldn't allow Greece to do so.

I almost spit out my coffee when you said this. Firstly, the US won't be bailing out anyone for a long time. Their debt position is horrendous, and America is in big trouble. Mark my words. Bailing out Canada is also a much bigger concern than bailing out Greece. Canada is a major economy. Greece is a rounding error. And in any case, the US is the one that's going to need the bailout.

As for the comment above that said hyperinflation has not come to the US as Peter Schiff predicted, I say be careful not to speak too soon. This trade war America is starting with the US over the RMB's peg against the USD is going to come to a head. And mark m words, when this situation in Europe settles down, the USD is going to nosedive.

 

[GraphicMatt]

So is the neoliberal economic plan for most western countries right now simply "cut services to the bone; pay down debt?"

Because that doesn't sound very fun.

 

[doady]

Are you kidding? Knowing that these tanks are going to be around for another five years or so is the best news of the day. Around 52 were just rebuilt, you can bet at least that many more will be refurbished, meaning the bus fleet has become *that* much more reliable.

http://farm3.static.flickr.com/2639/3879672423_581542d49d.jpg

Eliminating funding for transit vehicle replacement has no effect on the fishbowls. TTC could easily use the gas tax money instead to replace the buses and cut service levels, or alternatively the city could just raise taxes even more.

As you say yourself, many fishbowls were just rebuilt, even though bus replacement funding has been provided by the province for over a decade. So I am puzzled at why you think this funding has any effect on which buses the TTC chooses to replace.

But if Toronto really doesn't want the money because of this Fishbowl fetish, perhaps if the program is ever brought back then Toronto's share of the $170 million in annual funding can go to the other Ontario systems instead.

 

[brockm]

So is the neoliberal economic plan for most western countries right now simply "cut services to the bone; pay down debt?"

Because that doesn't sound very fun.

I think this is an informative YouTube video: http://www.youtube.com/watch?v=kOCnVaZsMvw

 

[CodeMonkey]

Unlike you, I have not read the creditor agreements....I have read my mortgage document though....If I used the money to build my ex wife a villa in spain....I don't get to say to the bank.....get it from her she has the villa!

Who's fault is it that you used your money to build your ex-wife a villa in Spain after the divorce?

But basically that how it would work. Debt associated with assets(eg. subway) in the new province would be inherited by the new government and not by the old. The only reason why you can't tell the bank to go after your ex-wife in Spain is because you, I and many others don't have that luxury; although, you could fight it in court.

Ontario, including Toronto, borrowed the money.....Ontario, including Toronto, owe it back. Even if the two halfs of Ontario agree some sort of split...they still need the agreement of the people they borrowed it from....here is a better idea then....why doesn't Ontario split into 3 parts. Toronto....the rest of the populated part of the province and find a couple of thousand acres of unpopulated land and make that NewOntario.....and we will have them assume the bulk of the debt....problem solved?

Strangely enough they used that method on GM.

 

[W. K. Lis]

Send e-mails and/or snail mail to your MPP and the Premier about Transit City funding. Let them know how you feel.

 

[TOareaFan]

Strangely enough they used that method on GM.

Not sure the GM restructure was close to that but if it was it was with the agreement of creditors, perhaps...

 

[Glen]

As for the comment above that said hyperinflation has not come to the US as Peter Schiff predicted, I say be careful not to speak too soon. This trade war America is starting with the US over the RMB's peg against the USD is going to come to a head. And mark m words, when this situation in Europe settles down, the USD is going to nosedive.

I think that threat is over stated. The most you would likely see is a 15% reduction in the value of the US$. Even that, in a world full of competitive devaluers, might be stretching it. Brad Setser did a good analysis of this before he left for the White House.

 

[TOareaFan]

Send e-mails and/or snail mail to your MPP and the Premier about Transit City funding. Let them know how you feel.

Even if we feel the limitation/elimination of deficits is a good thing?

 

[brockm]

I think that threat is over stated. The most you would likely see is a 15% reduction in the value of the US$. Even that, in a world full of competitive devaluers, might be stretching it. Brad Setser did a good analysis of this before he left for the White House.

I think you're quite optimistic. The structural imbalances in the US economy are far worse than most people want to believe. You've also got the fact that America is already on track to become the world's most indebted nation on a per-capita basis in the medium-term, with no real prospects of balancing it's finances within the next decade. America's fiscal survival is dependent on the misplaced belief that America will return itself to robust economic growth -- similar to previous periods of growth.

The saying that past performance is no guarantee of future success is salient here. The American consumer and the American government is effectively bankrupt. In fact, the only way you can get to a positive savings rate is by lumping in corporate savings. Individual savings in the US is insanely low. Average household debt is spiralling out of control, and the government actually wants people to keep borrowing and spending. More mortgages, more consumer credit, etc. In fact, the entire economic policy in the US is to pull out all the stops to discourage people from actually saving, because their economy is three-quarters consumption based.

I don't buy these theories that American productivity can make up for the imbalance. They've been saying that for a decade. And they'll keep saying, while the cancer of America's fiscal position continues to metastasize. I mean, America's position is already so bad, that a moderate decrease in the confidence of foreign creditors could bring the US government to it's knees.

If China were to dump the lion's share of it's US treasuries, or if the US Government were to see it's credit rating downgraded, the American government could be insolvent in a matter of weeks. That's how fragile it's situation is. And based on the Congressional Budget Office's projections, as well as the Office of the Comptroller General, the situation is projected to continue getting worse for at least another 15 years, before they can start to turn it around. Unlike others, I'm not betting that America can sustain itself for that long.

 

[GraphicMatt]

Even if we feel the limitation/elimination of deficits is a good thing?

Do you feel that transit was rightly one of the first places to cut when it comes to eliminating the deficit? Why?

 

[CodeMonkey]

Send e-mails and/or snail mail to your MPP and the Premier about Transit City funding. Let them know how you feel.

Unfortunately we're all on there spam list.

 

[brockm]

Do you feel that transit was rightly one of the first places to cut when it comes to eliminating the deficit? Why?

Discretionary capital expenditures is always the first place you cut. You worry about the structural imbalances first, and discretionary costs second.

 

[TOareaFan]

Do you feel that transit was rightly one of the first places to cut when it comes to eliminating the deficit? Why?

Mostly 'cause I don't know where else they could cut that much money quickly enough. Healthcare? not likely. Education? that is always a real tough sell.....mmmm what are the other big expenditures? Oh yeah there is that debt service one...not sure you can just cut that which sorta points out why debt is not such a good thing....each dollar of debt adds to your cost tomorrow of things you bought today..making things you think you need tomorrow that much harder to afford.