Unfair Transit Increase

By Ryan McGreal
Published March 15, 2007

Transportation for Liveable Communities (TLC), a working group of OPIRG McMaster, is a commendable volunteer organization in Hamilton whose members are working toward increasing transportation equity and choice in the city.

They also run an email listserv for ongoing discussion of current issues. A recent exchange on this year's proposed transit fare increase, recommended by city staff despite the fact that they predict it will result in 550,000 fewer rides this year, is quite possibly the most insightful analysis of the issue that I've seen in any forum or media entity.

With the permission of the participants, I've decided to share a summary of the exchange on RTH. I'd like to thank the TLC list members who participated in the discussion, graciously agreed to let me share their comments publicly, and offered further insightful suggestions toward the final draft if this article.

This is long (even by my standards) but covers some very important ground for anyone looking to understand the issues behind the proposed fare increase more fully.

Few Funding Options

Brendan Simons argued that the city does not have many options since transit operations grow more expensive each year (operator salaries tied to inflation plus rising fuel price) and using the gas tax transfer is a stopgap, not a solution.

As he put it, "Doing so again will leave nearly all the $12 million per year gas tax transfer committed in perpetuity. We will have wasted the biggest transit funding grant the city's ever seen on deferring a price increase for two years."

He pointed out that the other funding source is the general tax levy, and that transit advocates must "be willing to put our money where our mouths are" by informing council that they're willing to accept a tax increase beyond three percent to fund transit.

Roy Adams replied that Hamilton has an "unfair, regressive" funding system, where the lower city pays up to five times more in transit levies than wealthier suburbs, and many areas (including all of Flamborough) pay no levy at all. Adams believes this system, called area rating, is unfair and regressive because it penalizes people who depend on transit and can least afford to pay extra for it.

He also noted that people in the lower city are more likely to live in multiresidential rental buildings and therefore pay a higher general tax rate than property owners.

Eliminating Area Rating

"A public transit system is not a privilege for those who choose to use it. It is a public utility, an air cleaning device, an economic development incentive. It is of general benefit to the community and should be supported equitably by the whole community."
- Roy Adams

The "bottom line" for Adams "needs to be an increase in ridership and that needs to be achieved without further adding to the financial burden of those living in poverty." He believes suburban residents should pay "no less than their fair share" and that the poor should pay no more taxes until this is resolved.

Simons agreed, but noted that eliminating area rating "will mean a big increase for those in the 'suburban' areas" and called upon transit supporters living in lower-rated areas to inform their councillors that they're willing to pay more property tax.

Adams also pointed out that property taxes in the suburbs have risen faster than in the lower city and that "suburbanites ... won't be happy about paying still more." He believes the answer lies in education and public activism about the environmental benefits of transit as well as the equity of more progressive taxation to pay for transit.

He acknowledged that many people "will simply look at their overall tax bil and become enraged", and stated that the real solution must come from the federal and provincial governments funding transit in a planned rather than ad hoc fashion.

Peter Graefe noted, citing a recent CATCH report, that the Transportation Master Plan earmarks most of its spending priorities on road and highway construction and argued that some transit funding could come from questioning "the continued allocation of funds to certain sacred cows of the city's economic and planning bureaucracy."

Transit: Years of Neglect

Don McLean weighed in further on the allocation of funds, showing that since amalgamation, transit funding grew much more slowly than other selected city services - and this from a lower base since transit spending was cut deeply in the 1990s.

McLean argued, "Part of the reason is that the council found it easy to deal with transit costs - they simply raised fares - something they can't do for police budget increases, or planning budget increases, etc."

He included the following table (I've sorted the services by descending order of percent increase).

Annual budget for selected city services in Hamilton, 2000 to 2007
City service Budget in 2000 (millions $) Budget Requested for 2007 (millions $) Increase from 2000 to 2007 (millions $) 2000-07 Increase (percent)
Waste management 16.5 31.2 14.7 89.10%
DARTS/ATS 6.2 11 4.8 77.40%
Parks 15.3 24.1 8.8 57.50%
Roads and Traffic 36.8 57.6 20.8 56.50%
Fire services 40.4 59.2 18.8 46.50%
Police services 75.9 111 35.1 46.30%
Libraries 18.5 24.3 5.8 31.40%
HSR 21.6 27.9 6.3 29.20%

Source: Tax operating budget summary for 2000 and 2007, City of Hamilton

McLean noted that the DARTS increase stems from the city losing a human rights case on providing service to disabled users and that the waste management increase is due to the city's efforts to divert more garbage from landfills.

Increasing Transit Service

McLean pointed out that in Hamilton, tax funding covers only 43 percent of transit costs, among the lowest rates among 14 cities above 300,000 people. He calculated that "if area rating were eliminated tomorrow and taxes raised in the urban areas of the suburbs that have transit services, it would bring in an extra $7.7 million a year" toward a total budget that is currently $61.8 million.

With that additional money, the total budget would be $69.5 million and tax funding would cover $35.6 million, or 51 percent.

"We won't be able to plan a city wide network until we approach transit funding as 'Once I get on the bus, I can go anywhere'."
- Brendan Simons

In his summary to me when I asked him for permission to cite his posts to the TLC list, Simons argued that lowering fares and growing transit service are "mutually exclusive ... as the HSR is forced to cut costs to match the lost revenue."

He continued that raising fares "costs more, but leaves us with more transit service, potentially attracting new riders to offset the ones who decide they can't afford it anymore."

Simons also supported eliminating area rating, using the analogy of public schools:

They are both public systems which are required for the wellbeing of the city. You don't get a break on school taxes because you opt to send your kids to private school. Similarly, you shouldn't get a break on transit tax because you opted to live on the fringe of the network.

Finally, he cited recent changes to the Municipal Act and suggested that cities could tax "every parking spot in the city (not just city-owned meters, owners of big free lots like limeridge should pay too)" and earmark that revenue for transit.

McLean pointed out that the changes to the Municipal Act don't grant cities the right to tax parking lots (Toronto is governed under a separate Act). "It would be great it if it did, especially those acres of pavement around suburban malls, and the ones downtown which property owners have created out of good buildings in order to reduce their taxes."

He also cautioned that council has options beyond fare increases to move more money into transit service improvement. He acknowledged that councillors are reluctant to raise taxes for transit, but "they somehow find the courage when it comes to roads, fire, police, parks, waste management - virtually everything but transit."

"You aggravate fewer voters when you raise fares than when you increase taxes. It's called doing the political useful thing rather than the doing the right thing."
- Don McLean

McLean also reiterated that area rating is a major obstacle to sustainable transit funding. "Adding $72 a year to the bill of a minimum wage worker (and perhaps the same on her husband), is very unfair when a third of Hamilton households either don't make any tax contribution to the HSR or only a much lower one than the people living in the poorest part of the city."

He concluded by arguing that with the vast challenges of climate change, we should be working much more ambitiously to get people out of their cars and onto transit. He noted that five percent of Hamilton trips are by bus and 70 percent are by car and suggested, "a 'solution' to transit funding that mainly falls on the shoulders of the car drivers, not the bus passengers, is ideal. If we can't yet tax parking lots, we can install road tolls (an idea that seems to have more legs according to the city poll)."

Of course, the fare increase is a big step in precisely the wrong direction.

When I asked Adams for permission to cite his posts, he asked me to draw attention to the fact that increasing transit use is a longstanding and recently reaffirmed city policy. As Adams put it:

To take action that will, with an almost 100 percent certainty, produce the opposite result is perverse, an insult to the level of ethical behaviour on which we ought to be able to rely. In short, to behave ethically, as I see it at any rate, Council must either take action that will increase ridership or publicly renounce its policy stand. [emphasis added]

He also added that city staff suggests the projected drop in ridership may only be temporary, not permanent, but do not provide any evidence to this effect.

Finally, he wants to know why city staff believe they have "the leeway to recommend a course of action that is totally and clearly offensive to Council policy" and suggested that the proposed ethics commissioner might want to investigate this.

Opposing a Fare Increase

Don McLean summarized his post with this list of reasons not to support a fare increase:

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

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By joejoe (anonymous) | Posted March 15, 2007 at 15:28:26

Very informative article Ryan.

I had previously thought that the area rating system was fair. But now that I look at it I see that transit is indeed a service that benefits everybody, and thus should be funded by all.

McLean's bullet point summary is also very convincing. What do we need to do next to communicate this to councillors?

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