Upper Government Funding: No Replacement for a Responsible Municipal Government

Introduction

With two elections this year, Ottawa has received very good news on two fronts. First, on the 27th of January, the federal government announced $18 million a year to go towards OC Transpo's capital expenses. Then, on the 4th of February, the provincial Progressive Conservatives and Liberal both announced plans to upload the LRT's assets to the province, while the NDP promised a 50/50 cost sharing program for municipal transit operations. While not guaranteed, the second item has a good chance of going ahead; the first will depend on the whims of the maybe-Poilievre government. 

Both of these represent changes in how OC Transpo could be funded. 

Money Pots, Starring the Federal Government

The federal announcement first. As part of their Canada Public Transit Fund, the federal government will dispense $18 million a year to the City of Ottawa for capital expenditures related to transit. This will begin in 2026, and continue until 2036. 

This funding is part of the Baseline Funding Stream, which has nothing to do with the Baseline BRT. The money is intended to 

"[focus] on enhancing routine capital and non-capital investment, ensuring the continual growth, rehabilitation, and replacement of public transit and active transportation infrastructure as well as increasing capacity for planning." 

In short, it is meant to fund recurring investment into bus rehabilitation, fleet replacement, and other state of good repair projects. 

This is not, and I repeat, not a replacement for a responsible municipal government. 

OC Transpo is facing a $36 million shortfall this year, while staring down a $120 million gap starting next year. The federal government's funding is certainly welcome, but it is not enough to close this year's gap, let alone the next. The city is going to have to find a way to produce the funding. 

I do not believe that the federal government intends to fund the city's transit operations. The amount, which is half of what Dear Mayor is seeking this year, is roughly in line with ridership in, among other cities, Vancouver and Mississauga. 

The City is likely to use the money to fill holes. While technically, the money cannot be used in capital expenses; in reality, this is a paper exercise. This year, the City put $52 million of property tax revenue into capital expenditure, and for next year's budget, they will just move the money to operations to help plug holes. I have no doubt the federal government knows this, and announced the money this way to save face.  

But the federal government's money cannot save Transit Services from ourselves. $18 million/year is welcome, but it is a fraction of provincial gas tax revenue, which amounted to $60 million this year, let alone the operational funds that OC Transpo needs to continue operations. The only people who can make the decisions needed to back OC Transpo are ourselves. 

Superlinx comes to Ottawa

Everybody welcome Superlinx to town! 

On 4 February, Doug Ford and Bonnie Crombie simultaneously announced their intention to upload the LRT, which, presumably, includes all four existing and under construction lines, to the province. Doug Ford specifically mentioned uploading the system to Metrolinx, while the Liberals specifically promised to exclude Metrolinx. 

The NDP plan, pending details, is to offer a 50/50 operational cost split, which was what the province offered before Mike Harris tore up the arrangement in 1996. 

The mayor is already running victory laps in his profoundly worthless "Fairness for Ottawa" campaign, which is designed to promote the total lack of responsibility at the City of Ottawa. Opponents of Metrolinx, which has had high-profile failures in Toronto, are taking aim. 

What does this all mean for Ottawa? 

If the upload goes through, the devil will be in the details. The City of Ottawa is hardly a more responsible organization than Metrolinx, and their management has been questionable from time to time. While I do not believe that Metrolinx would be a substantial downgrade, I would be asking questions about the details of such an arrangement. 

Who has final say in the projects, whether that be scope, alignment, cost, or technology? Given that Metrolinx is a Toronto-oriented organization, what safeguards will there be to ensure that Ottawa does not fall by the wayside? For that matter, what is the exact breakdown of who pays/who gets responsibility? 

It is almost certain that operational costs will remain with the City of Ottawa. For those hoping for a restoration of five minute headways, you're out of luck. 

The question of where the money will go is a bit more complex. If the debt payments for the LRT are not in the Transit Levy - and I believe they are not - then the money cannot go directly towards filling the operations hole. Instead, they would have to reduce taxes and increase the transit levy to compensate - but this is moving capital expenses to operations, a surefire way to dig a deep, dark financial hole. 

The amount held on the books is around $4 billion, according to various politicians and my rough calculations of cost breakdowns for Stages 1/2. If this money were no longer held as a liability (though the LRT is an asset, it doesn't actually make money), the city would have increased debt room to play with other priorities. We could build many things; but I suggest moving BRT projects up the priority list in the upcoming Transportation Master Plan. 

For $4 billion, we could build a Baseline, Carling, Kanata North, South Cumberland, and Chapman Mills Transitway and still have room to cut $2.5 billion of debt off our tables. Such a large investment would have a massive impact, cutting travel times, (hopefully) bringing increased service levels to many communities across the city, and increasing ridership on OC Transpo while reducing expenditures. 

But there are many competing demands on money these days, and it will be up to the city to see that it is not wasted on tax cuts. I would not be surprised at that outcome - when the upload goes through, we will need to be vigilant in advocating for reinvestment into amenities and transportation, rather than wasting it on the city's most expensive political stunt, ever. 

Thoughts

These two announcements, really the latter, create a great opportunity to move money into more investments, a second generational investment in transit after LRT was the first. They could help increase ridership, taking OC Transpo out of its financial pit and setting back on track to be a great transit system. 

Alternatively, we can waste the money by patching holes, digging new holes, and on political stunts. When the LRT upload goes through, we need to push for more transit investment with the new debt headroom; even 1/3 of the freed amount invested in BRT would be transformational for hundreds of thousands of riders, everyday. And regardless of any money, we need to advocate for OC Transpo reform and increased funding for service. 

Then, and only then, can we stabilize OC Transpo, and make it a first choice for transportation across Ottawa. Our choice.