Special Report: Transit

Merulla: Notice of Motion to Address Area Rating for Transit

The motion would direct staff to report back on addressing area rating for transit in a way that will "align with the overall city Transit strategy."

By Ryan McGreal
Published February 15, 2019

Ward 4 Councillor Sam Merulla has just circulated a notice of motion in which Council would direct staff to report back on area rating for transit as part of the 2020 budget process.

Councillor Merulla introduced the notice at today's General Issues Committee budget meeting. It will likely be presented at the next budget meeting, scheduled for February 25.

Area Rating for Transit

Area rating is the municipal practice under which different parts of the city pay different property tax rates toward transit and receive different levels of transit service as a result. Area rating dates back to the amalgamation of the old city of Hamilton with suburban communities Ancaster, Dundas, Flamborough, Glanbrook and Stoney Creek.

Before amalgamation, the suburbs paid the City of Hamilton to provide some transit service from the HSR, but at a much lower level than the old city received. As part of the amalgamation compromise, that historic discrepancy in tax rate and service level was grandfathered into the new city when it took effect on January 1, 2001.

The main problem with area rating is that it locks in lower transit service to those former suburbs. Any increase in service must be borne entirely by local ratepayers instead of distributed across the entire tax base, which makes service improvements politically difficult.

In addition, the service boundaries are highly arbitrary: people living on opposite sides of the same street can pay vastly different transit tax rates. Not only is this unfair, but also it makes coherent city-wide transit planning impossible.

Hamilton is exceedingly rare among Ontario municipalities in maintaining different tax rates and service levels for transit. (Earlier this month, RTH received an email from Geoff McCausland, Councillor for Ward 4 in the City of Greater Sudbury, who lamented that his city still has area rating for transit and fire service - also as a result of amalgmation.)

Motion to Phase Out Area Rating

Councillor Merulla's motion does not explicitly call for a report on eliminating area rating, but that is implicit in the text, since the preamble notes that Council "supports a system wide approach to public transit which includes enhancing service levels" and the second resolution states that the staff report should "align with the overall City Transit strategy."

In an email response to RTH, Merulla confirmed that the goal is to phase out area rating, a policy Merulla introduced in 2015 and threatened to revisit in 2016 but was stymied by a majority of his colleagues. The issue is controversial among councillors whose constituents currently pay much lower transit rates than residents in the old city and whose rates would go up as area rating is phased out.

The most obvious approach would be to phase area rating out over a period of, say, four years. This is how Council voted to resolve area rating for fire, emergency and recreation services in 2011, but they decided to kick transit area rating out to the 2014-2018 term of Council.

That 2014-2018 Council, in turn, kicked transit area rating down the road yet again. So here we are in 2019, 18 years after amalgamation, and area rating for transit still has not been resolved.

Grow Total Transit Funding

The other issue Council will have to address is how to structure the phase-out in such a way that total transit revenue grows and service can expand to underserved areas.

If Council merely harmonizes rates, the cost of the current system will be distribued across the entire city but the service will still be concentrated in the old city and especially the lower city. That would be unfair to suburban ratepayers, who would rightly expect more service in exchange for contributing more fairly.

One way to solve this is for Council to increase the total HSR budget each year of the area rating phase-out, such that the old city continues to pay the same net rate while the suburban rates are harmonized.

With more funding, Hamilton can finally start to keep its annual promise that it will boost service and grow ridership.

Text of the Motion

Following is the text of Merulla's notice of motion:

Whereas transportation and public transit continue to be significant and important public policy matters; and

Whereas public transit (known as HSR) in the City of Hamilton remains a priority for Council; and

Whereas public transit ‎is currently apportioned to residents based on geographic area and service levels; and

Whereas Council has stated on numerous occasions, it supports a system wide approach to public transit which includes enhancing service levels;

Therefore let it be resolved:

That City staff report back as part of the 2020 Budget process

That this report align with the overall City Transit strategy.

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 writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also 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 RolfeBaltzer (registered) | Posted February 16, 2019 at 10:50:39

Just as I pay taxes so other people’s children can go to school and have medical care so is the transportation issue ! Both are for the common good and for the benefit of the community as a whole and no one should begrudge having to pay a little less or more for this benefit! Am all for getting rid of area ratings in this matter. Thanks for thinking of getting more equality in the system!

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By JohnMcGreal (registered) | Posted February 17, 2019 at 17:14:44

Will councillors of WARD 1,2,3,4,5,6,7,8 give up $1.5 M per year Area rating re-investment Reserve fund if area rating Phase-out is approved for all ward taxes are equal for taxpayers of CITY of HAMILTON ?

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By Ryan (registered) - website | Posted February 18, 2019 at 07:25:43 in reply to Comment 124880

You're conflating two separate issues.

The area rating re-investment reserve fund in wards 1-8 was a compromise that Council reached in 2011 when phasing out area rating for fire, emergency and recreation services. At that time, when the rates were harmonized between the old-city wards and the suburban wards for those services, it resulted in tax rates going up for the suburban wards and down for the old-city wards.

Instead of actually lowering the old-city tax rates, Council left them at the higher level and allocated the extra revenue as a capital reserve. Each ward's capital reserve comes from its own extra tax levy.

There's an argument that can be made to phase out that extra levy and capital reserve for the old-city wards; or, alternately, to phase in an extra levy for suburban wards so they can also have a ward-specific capital reserve.

What Merulla's motion refers to is area rating for transit, a separate issue. The main issue with transit in Hamilton is that it is systematically under-funded compared to other cities with higher funding funding, better transit service and higher transit ridership. (There's a very direct, straightforward linear correlation between transit funding, service and ridership.)

In the case of transit, I support holding the old-city wards at their current levy rate and bringing every other ward up to that rate, which would increase the total transit budget and allow the city to expand service in underserved areas and increase ridership.

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By PGFontana (registered) | Posted February 24, 2019 at 06:23:08

This is a great idea, and long overdue, as the issue of transit rating has been the primary reason for chronic under funding of our HSR. And of course as we all know, doing so would eliminate Councilor Fergusons qualified and tepid support of LRT, which would very likely be the last nail in that coffin. So it's a win/win situation. Fred is the only fly in the ointment.

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