Tolls, taxes, fees for transit? John Tory aims to lessen the stigma

http://www.theglobeandmail.com/news/national/toronto/tolls-taxes-fees-for-transit-john-tory-aims-to-lessen-the-stigma/article1549090/

John Tory, like the policy battle he’s about to join, has evolved since 2003.

In the mayoral race that year, he “rose up in great indignation” at David Miller’s suggestion that Toronto’s roads be tolled.

Now, seven years later, Mr. Tory intends to use his platform as chairman of the Toronto City Summit Alliance to ratchet down the public indignation that often greets five ideas for funding public transit: road tolls; a Greater Toronto sales tax; a parking tax; a gas-tax hike and a property-tax increase.

“The notion that it’s none of the above is not on,” Mr. Tory said. “This is a test of leadership because otherwise to say you’re going to build all this transit without saying how you’re going to pay for it is, to me, a meaningless promise.”

The Toronto City Summit Alliance, which Mr. Tory took over after the death of founder David Pecaut, has quietly formed a working group of about 25 top minds to pore over five options for funding transit, along with other issues of transportation and infrastructure in Greater Toronto. Members have been drawn from the Toronto Board of Trade, regional transportation agency Metrolinx, and the prominent planning firms Urban Strategies, Inc., and IBI Group, among other organizations.

The official goal will be to recommend ways to raise the approximately $2-billion a year Metrolinx has said it needs to crisscross the GTA and Hamilton with new rapid-transit projects over the next 25 years.

More important, the TCSA, the city-building organization that helped conjure Luminato from thin air, intends to make it possible for candidates to utter the words tolls and taxes without being crucified.

“What’s going on right now is a bit of denial in the populace at large,” said Joe Berridge, a partner at Urban Strategies, Inc. and member of the TCSA subcommittee. “They feel we should just build this transit and get on with it. But we’re looking at a very big build and governments that are not flush with the cash. In some way or another we’re going to have to tax ourselves in the region – whether that tax is in the form of a gas tax, sales tax or various kinds of road pricing.”

Beating congestion has so far dominated the race to replace David Miller. His light-rail plan, Transit City, has been temporarily derailed by the province, which postponed $4-billion in transit funding in its budget in March.

Although the delay made the transit-funding question more urgent, all but two major candidates have rejected road tolls as a means of raising new revenue. Women’s Post publisher Sarah Thomson has pitched a rush-hour toll on the Gardiner Expressway and Don Valley Parkway to pay for more subways, while George Smitherman has said he’s open to discussing tolls.

“Any mayoral candidate who says you can have your cake and eat it too on transit is just not telling the truth,” Mr. Berridge said.

The TCSA group, which has met twice, intends to hold public roundtables this summer, Mr. Tory said. He said it was too early to say whether members would have firm recommendations in time for the Oct. 25 election. The TCSA’s next formal summit is not until February, 2011 – less than a year before provincial politicians face the electorate. Most of the funding options would need Queen’s Park’s approval.

The Toronto Board of Trade, meanwhile, intends to unveil separately its recommendations for funding transit in plenty of time for municipal voting day. “We may take it down to a short list [of funding options],” said Carol Wilding, president of the board. “We’ll ask the candidates to do the same thing, recognizing they may not want to go there. But we’ll be pushing.”

National Post transit discussion

This article ran in the National Post on 7 December:

When the Toronto Transit Commission announced in November it would hike fares a 25¢ in the new year -- a roughly 10% increase -- it blamed the usual suspects: rising costs of fuel and wages.

The system, said TTC chairman Adam Giambrone, faced a $100-million shortfall in next year's operating budget.

When the bad news broke, the Torontoist.com, compared the inflation of the TTC's 21 fare hikes in the past 30 years against the price of gasoline and against the inflation rate.

Consistently, the analysis found, TTC fares had risen faster than inflation, and far faster than the price of gas. Between 1980 and 2010, the cash fare, adjusted for inflation, soared more than 80% and token prices are up 50%. The price of a litre of unleaded gas? Up about 30%, without inflation. As for wage increases, Statistics Canada reported last year that the median full-time, full-year salary of average Canadians has hardly increased at all since 1980.

Although it is charging more than ever, getting heftier federal, provincial and municipal subsidies than at any time in its history, although fuelling a car is pricier; and though its customer base has never been larger or keener to reduce its carbon footprint, the TTC, the largest system in the country, is struggling as much as ever to stem its losses. If this is the future of public transit, it does not look bright.

As other major systems across the continent strain in similar circumstances, the strategy of public transit system boosters has been to promote the service as an environmental necessity. In the name of Mother Nature, North American transit systems have received billions in subsidies in recent years - even though they were never developed for environmental purposes in the first place.

If the goal is to reduce carbon dioxide emissions, air pollution and gas consumption, and maximize the environmental impact of sustainability spending, we may be better off without publicly funding transit at all.

"Subsidized transit is not sustainable by definition," says Wendell Cox, a transport policy consultant in St. Louis, and former L.A. County Transportation commissioner. "The potential of public transit has been so overblown it's almost scandalous."

It's not that environmentally minded transit promoters are being dishonest when they argue that city buses are more efficient than private cars: It's that they're talking about a fictional world where far more people ride buses. Mass transit vehicles use up roughly the same energy whether they are full or empty, and for much of the time, they're more empty than full.

For the bulk of the day, and on quieter routes, the average city bus usually undoes whatever efficiencies are gained during the few hours a day, on the few routes, where transit is at its peak.

Last year, policy analyst Randal O'Toole ran the numbers for the CATO Institute, where he is a senior fellow, comparing mass transit vehicles to private vehicles, ranking each based on how much energy they consume and how much CO2 they emit. The average motorized city bus, he reports, burns 27% more energy per mile than a private car and emits 31% more pounds of CO2. The U.S. Bureau of Transportation Statistics confirms that the average city bus requires 20% more energy per passenger than the average car.

"Unfortunately, right now the state of the art is that you're generally better off with private automobiles when you're talking about energy utilization. About the only way that transit can be competitive for energy or for environmental quality is if the transit lines gets an incredible amount of use, far higher than is now normally the case," says Tom Rubin, a transit policy consultant in California, and former chief financial officer of the Los Angeles County Metropolitan Transportation Authority. But crowded systems are a turn-off for riders, he says, so more passengers means even more buses and rail cars. "It's almost impossible to make transit more attractive without spending a huge amount of money."

The bus may be the most inefficient part of any major city's transit network, but they're the most vital part. Wider use of subways and light rail relies utterly on a feeder system of buses, says Michael Roschlau, president of the Canadian Urban Transit Association. "You can't just run [Calgary's] C-Train by itself and expect everyone to drive to the stations," he says. "Same thing for the subway in Toronto or Skytrain in Vancouver."

Without buses to carry them from their neighbourhood to the train stations, even fewer citizens would ride the trains, making trains, in turn, less efficient per passenger. Already, when trains, subways and streetcars are combined, the average public transit system is still no more efficient that private cars, according to the CATO study. All transit together does emit less CO2 than passenger cars carrying the same number of people the same distance (about 13% less) but even that gap is disappearing -- fast.

The U.S. Department of Energy's Data Book shows that while transit's energy efficiency has worsened in recent decades -- transit buses today consume 4,315 BTUs per passenger mile, or about 50% more energy than in 1980 -- the trend in cars has been the opposite direction: Today's cars are already nearly 20% more efficient than they were 25 years ago, down from 4,348 BTUs per passenger mile in 1980 to 3,514 in 2007.

The environmental case for public transit is falling just as fast, now that hybrid cars are achieving mass market status, with 65 models set to hit North American roads next year, Chevrolet planning to launch its electric Volt by 2011 and manufacturers rolling out super-high efficiency vehicles. In the next few years especially, the average energy consumption of passenger vehicles, and their emission levels, will only improve, with projections by the International Council on Clean Transportation showing the average auto could beat all public transit modes for efficiency and CO2 within the next five years.

"At this point, a Toyota Prius is less greenhouse-intensive than New York City Transit," Mr. Cox says. "Whatever advantage that transit has at the moment is going away very quickly."

Once eco-conscious urbanites realize the bus is worse for the planet than cars, they'll have little reason to keep riding, making transit's comparative per-passenger environmental footprint look even worse. And while transit system operators talk of "greening" their fleet, the fact is they face substantial limits. Whatever green gains transit can make, automobiles can probably do better, Mr. Rubin says.

When the federal government, the B.C. government and BC Transit revealed plans to run 20 hydrogen-powered buses in Whistler, B.C., in February for the Olympics, even the hard-green David Suzuki Foundation balked at the preposterous $2-million-per-bus price tag -- four times the price of a standard diesel -- arguing that the money would have been better spent on traditional transit initiatives, which "are on life support as far as the financial needs go," Ian Bruce, the group's climate-change campaigner, said.

He's surely right about the pointlessness of what will amount to a four-year, $90-million showpiece of technology not even remotely realistic for actual, financially strapped public transit systems.

And more money for diesel-powered buses may be hardly more worthwhile: The fact is that despite best efforts of transit planners and funding governments, and surveys showing a public keen on environmentalism, most commuters simply will not, or cannot, ride.

Last year's census data confirmed that the vast majority of Canadians have little use for transit. Just 216,000 more people rode at least once than did in 2001, a half-a-percentage increase, but that's actually a decrease relative to the 5.4% population growth over the same period. At the same time, Statistics Canada shows that operating costs for Canadian transit system has ballooned, up 30% from $3.7-billion in 2003 to $4.8-billion in 2007. In the United States, public transit's market share for travel has fallen by a third since 1980, from 1.5% to 1% in 2005. If anything were to get people out of their cars to stand at a bus stop, it would be the severe pain of soaring gas prices. But even as fuel in the United States. approached the unseen price of $4 a gallon in 2008, public transit ridership rose a mere 3.3%.

Transit boosters insist that we must go further, and redesign our cities to support transit systems. "Our cities continue to approve the suburban sorts of development that are very difficult to serve using public transit," Stephen Hazell, executive director of the Sierra Club of Canada, told reporters upon release of last year's disappointing ridership data. But the thousands of delivery trucks, taxi drivers, emergency vehicles, service trucks, car-bound workers and buses mean even high-density cities will keep needing highways, ring roads, bridges and flyovers. Meanwhile the massive cost of overhauling cities is just more billions to address an automobile environmental problem that is already on the way to resolving itself -- money that might be better, and more effectively deployed toward other earth-friendly measures, such as reducing traffic congestion.

A congestion charge toll implemented in Stockholm in 2007, for instance, reduced CO2 emissions in that city by roughly 16% last year, cut traffic by 18%, and, because it exempts low-emissions vehicles, led to a tripling of purchases of so-called green cars. Best of all, it sustains itself.

More roads, and more efficient roads, still won't address public transit's original, non-environmental purpose: providing mobility for citizens who lack their own. But where public transit is absent, or impractical, solutions for the small minority totally lacking other means have readily sprung up. Ridesharing applications for smart phones -- users enter their location and desired destination and a cost-conscious carpooler responds -- are already in wide use, Mr. Rubin says. Self-sustaining, small-scale private jitney systems have successfully operated for years in Atlantic City and Puerto Rico (all North America's early public transit systems were privately operated until they were nationalized). And with billions freed up from public transit funds, it appears entirely feasible to simply offer subsidized Prius taxis, or even car subsidies, to the small portion of the public entirely reliant on public mobility. A study last year by HDR Decision Economics, commissioned by the Canadian Urban Transit Association, found that Canada's public systems will need $78-billion more in infrastructure spending and $3.6-billion in annual subsidies to reach optimum capacity. For that kind of money, Canadian governments could, if they wanted, hand out $16,000 car or taxi allowances to every single Canadian who rides transit even casually, and still have $50-billion left over at the end of the decade. That plan wouldn't please the public unions and other transit-reliant lobbies pressing for more green-related transit funding. But it would relieve Canadians from having to perpetually prop up a system that's increasingly unsustainable -- financially and environmentally.

National Post

klibin@nationalpost.

Kudos to letter writer Patrick Condon for writing this response:

Re: Save The Environment: Don't Take Transit, Kevin Libin, Dec. 7.

Kevin Libin gets it all wrong. He uses average transit ridership figures from cities in the United States that are falling from a market share of 1.5% of all trips to 1% of all trips. If you have ever been to Atlanta or Phoenix you can see why. In the Vancouver area, however, transit trips to work increased from 16%t oover 17% during the same period, seventeen times more trips per capita than in sprawling U.S. cities.

More misleading still is the claim from the Cato Institute that a Toyota Prius produces less greenhouse gas per passenger mile than a diesel bus. But for this to happen (according to analysis by the University of British Columbia Design Centre), the Prius would have to have five people in it and the diesel bus no more than 10. I don't remember ever seeing a bus with less than ten people in it, or a Prius with more than two, do you?

Professor Patrick M. Condon, University of British Columbia, James Taylor Chair in Landscape and Liveable Environments, Vancouver.

This letter went unpublished:

While Kevin Libin is entirely correct to challenge the generally uncontested conclusion that public transit is necessarily clean and efficient, he draws some unjustified conclusions based on some statistical sleight of hand. First, his comparisons present a distorted picture: on the one hand, he compares the per kilometre transportation cost between cars and public transit while on the other hand, he compares the energy consumption per passenger between cars and city buses. Far more costly light rail, included in the cost comparison, is excluded from the energy comparison, where the higher cost pays dividends, using less energy than the buses he identifies. Furthermore, the per kilometre cost referenced in the first figure is based on amortising all kilometres driven by the total cost incurred. This does not accurately represent the cost associated with driving in a grid-locked metropolis. In this regard, I commend Libin for his praise for Stockholm's congestion charge toll, though it is worth noting that Stockholm's official report indicates that the majority of diverted car occupants opted for public transit over the purchase of a low-emission vehicle.

Second, the graph that compares CO2 emissions per passenger mile is similarly misleading. On consulting the CATO policy analysis referenced, it is evident that the vehicle fuel efficiencies used are the ideal values from the American Environmental Protection Agency which represent driving new cars (this study used the 2008 model years) under ideal city conditions which do not represent typical, rush-hour city driving. However, the transit values used are the actual energy consumption values from the Federal Transit Administration. Furthermore, as rail runs on electricity, it is only as clean as its source. The translation of energy consumption to CO2 emissions for this study is based on the 2006 U.S. State energy profiles though CATO did not elaborate on how it selected a value of CO2 emissions per unit energy produced. While we are certainly stuck with decades old electricity plants, sources including nuclear, hydro, solar, and wind offer the potential to reduce these emissions numbers to zero. The vehicles in question may have been built in 2008, but the power plants certainly were not.

It is important that the viability of public transit options be examined, but, as a starting point, I believe that better-researched studies should be employed.

Yours sincerely,
N Ellens

US Highways Increasingly More Subsidized

Original link: http://www.subsidyscope.com/transportation/highways/funding/

Interesting - this study shows that the US highway system is more subsidized than both GO Transit (80% fare revenue) and the TTC. (70%)

Analysis Finds Shifting Trends in Highway Funding: User Fees Make Up Decreasing Share

The way America's roads are funded is changing. Revenues that predominantly come from users of roads (“user fees”), including fuel taxes, vehicle registration fees and tolls, pay for a decreasing share of road costs. Taxes and fees not directly related to highway use (“non-user fees”) and bonds are making up the difference.

Using Federal Highway Administration statistics, Subsidyscope has calculated that in 2007, 51 percent of the nation's $193 billion set aside for highway construction and maintenance was generated through user fees—down from 10 years earlier when user fees made up 61 percent of total spending on roads. The rest came from other sources, including revenue generated by income, sales and property taxes, as well as bond issues.

Source: Highway Statistics, forms HF-10 and HF-210, Federal Highway Administration.

Going back further, the trend is more pronounced. Forty years ago, user fees amounted to 71 percent of revenues spent on roads. Today, user fee revenue as a share of total highway-related funds is at an all-time low since the Interstate Highway System was created in 1957. A complete data set of highway revenue by source is available for download. In 2007, non-user revenues contributed $70 billion to the highway system. By comparison, this contribution totaled $26 billion in 1967 (in 2007 dollars).

Not all user fees collected are made available for highway purposes. Of the 18.4 cent per gallon federal tax on gasoline, 2.86 cents are allocated specifically for mass transit projects. Another 0.1 cent per gallon is used to pay for environmental cleanup resulting from leaking fuel storage tanks. From 1990 to 1997, the federal government also set aside a portion of taxes on gasoline, diesel and other fuels to reduce budget deficits.

However, even if those funds were fully devoted to highways, total user fee revenue accounted for only 65 percent of all funds set aside for highways in 2007, according to Subsidyscope calculations. This is down from 84 percent in 1997 and 77 percent in 1967. Subsidyscope provides a complete data set of user fee revenues and allocations for download.

Various factors account for the shift in funding away from users fees. Fuel taxes lose their buying power unless adjusted to keep pace with rising highway construction and maintenance costs. The amount of federal fuel tax allocated to highway purposes has not increased since 1997 and states have had trouble increasing fuel taxes to keep up with inflation. Further, changes in driving patterns and fuel consumption can lead to unexpected dips and peaks in user revenues. For instance, increases in fuel prices at the pump can cause vehicle owners to cut back on driving, reducing revenues. Similarly, changes in vehicle efficiency can reduce revenues available from fuel taxes while vehicle usage remains constant.

Another major funding source for roads is borrowing through bond measures, which made up almost 13 percent of highway funds available in 2007. This number has fluctuated over the years. Moreover, the use of bonds to fund roads varies widely from state to state. Subsidyscope considers bonds separately from user fees and other revenue because it is not clear which sources of revenues will be used to repay the bonds.

In addition to a decline in user fee revenue, federal dollars have gradually declined as a share of total highway funding. As a result, state and local governments have taken on a higher share of road costs and are increasingly reliant on alternative sources of revenue.

All data are from Highway Statistics, forms HF-10 and HF-210, Federal Highway Administration. All figures adjusted for inflation using the Engineering News Record Construction Cost Index.

Updated November 25, 2009

The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Pew applies a rigorous, analytical approach to improve public policy, inform the public and stimulate civic life. We partner with a diverse range of donors, public and private organizations and concerned citizens who share our commitment to fact-based solutions and goal-driven investments to improve society.