Raise the Hammer
If we are to make progress in our goal of creating the city we want we have to sort out the contradictions in how we pay for transit.
By Roy Adams
Published January 27, 2006
Increasing public transit ridership is one of the goals of the Province's Proposed Growth Plan for the Greater Golden Horseshoe. It is also one of the explicit goals of Hamilton's Vision 2020 which was recently re-endorsed by City Council. The reason for this policy is that inexpensive and readily available public transit is a critical element of livable cities.
The existence of an efficient and convenient public transit system keeps down traffic congestion, urban sprawl, and pollution. It enhances the attractiveness of urban cores. It is fairer to the poor who have difficultly affording the cost of automobiles. In short, a well functioning public transit system is to the benefit of society as a whole.
As part of this year's budget discussions, the city's Public Works Department is requesting an increase to its transit budget of $5,457,000. The Department has provided Council with five options for funding the increase and has recommended Option 2, which will result in a bus fare hike and the loss of riders.
The recommendation calls for a $0.15 increase per fare, an increase to monthly passes of $8.50 per month and an increase in the cost of senior passes of $40. The Department estimates that these new rates will raise an estimated $1,450,000 but will result in a reduction of an estimated 780,000 rides per year (see "Consideration of a Transit Fare Increase, PW 05124" submitted by the Transit Division of Hamilton Public Works Department, November 18, 2005).
Not only will this proposal, if implemented, hurt the quality of life in Hamilton as well as the city's goal of urban renewal, it will also result in a loss of future revenues from the Province. In 2007 Hamilton is eligible to receive up to $12 million in Provincial gas tax money but the amount it will receive is partially contingent on ridership.
It is difficult to estimate the precise dollar amount that will be lost because the distribution of funds will be based in part on ridership changes in other municipalities. But it is clear that putting into effect a recommendation that will reduce the use of public transit is contrary to intent of the Province's gas tax strategy.
In 2004/05 when bus fares were frozen, HSR ridership increased by enough to generate $600,000 in new income. Since ridership will be lost under the existing proposal income from future growth will also be lost.
An alternative to a fare increase is to raise the entire required amount from the general tax levy. Our property taxes are already too high and so this is not a good solution but it is perhaps a better one than imposing what is in effect a new tax burden on the poor and seeing our vision of a vibrant city grow dimmer.
What would it cost the average household to generate an extra $1,450,000 in income? A one percent tax increase ($24 per household) would result in an additional $5.1 million in revenue. To raise the $1,450,000 needed to hold the line on bus fares, each Hamilton household would have to chip in roughly an extra $7.
This amount is only a small fraction of the extra $102 it would cost pass holders, those for whom the HSR is their major option for getting around town. A large percent of regular HSR riders are low income people to whom any increase in costs means real hardship.
In short, for little more than pocket change a loss of 780,000 rides could be avoided, the transit tax burden on those with low income could be ameliorated and the goals of both Hamilton's Vision 2020 and the Province's Greater Golden Horseshoe Growth Plan could be met.
One fly in this ointment is the theory behind the current financing of Hamilton transit. Despite being generally acclaimed as a general benefit to the city as a whole, Hamilton policy is apparently based on the alternative theory that urban transit is of benefit largely to its users.
Thus, contrary to other Ontario cities, transit in Hamilton is "area-rated." According to transit activist Don McLean, "Flamborough and all the rural areas pay nothing in taxes for transit. An average $179,000 home in Ancaster pays $34, in Dundas $40, in Stoney Creek $60, and in Hamilton $165. Hamilton is the only city in the province (and likely the entire country) which area-rates transit WITHIN the urban area."
Another option would be to raise cash fares while reducing the cost of passes. That is exactly what the city of London, England has recently done. The idea is to push more riders to purchase passes and thus reduce the cost of processing tons of coins. For those who rely almost exclusively on public transit this option, although far from ideal, would be much fairer than raising the price of both cash fares and passes.
It can hardly be expected that policy goals will be met unless there is policy consistency across the spectrum. Hamilton's goal of creating a more livable community in part by increasing public transit ridership is being hindered by the contrary policy of driving away ridership by raising fares while allowing homeowners in relatively wealthy areas of the city such as Dundas,
Ancaster and Flamborough to pay much reduced transit rates compared to those in the poorer central area of the city. These contradictory policies need to be publicly debated. If we are to make progress in our goal of creating the city we want we have to sort out these contradictions.
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