Excerpted from today's report from the Residential & Civil Construction Alliance of Ontario, Financing Roads and Public Transit in the Greater Toronto and Hamilton Area:
"Public transit fares are inefficiently designed in several ways. First, with the exception of GO Transit, fares do not vary systematically with distance traveled. This inefficiency encourages urban sprawl because people can live far from work and commute by transit at low fares. Flat fares also discourage people from using transit for short trips, and this low demand makes it difficult to justify expanding service to nearby suburbs. Second, fares do not vary with time even though ridership and crowding fluctuate predictably throughout the day and week. Failing to charge higher fares during peak hours can result in over-investment in public transit infrastructure. Finally, transit is mainly a local responsibility in the GTHA which makes it difficult to integrate service throughout the region and to implement distance-based fares. The GTHA should adopt a more efficient and integrated fare structure.
Recommendation 1: Transit fares should be based on distance traveled and time of use. A zonal scheme with peak/off-peak fare differentiation would be a reasonable compromise between strict adherence to marginal-cost pricing rules and ease of comprehension and use for riders. Implementing such a fare structure would be facilitated with the Presto fare-card system. Average transit fares should not be increased unless, perhaps, road pricing is introduced along the same travel corridors or on a wide scale.
Automobile usage in the GTHA is even less efficiently priced than transit. On-street parking in high-demand areas is often priced well below its scarcity value, while privately owned garage parking is sometimes overpriced. Both price distortions encourage drivers to search for cheap but scarce parking spots. This wastes their time, and also impedes through-traffic. Parking space is controlled by various regulations, but they are costly to enforce and have some adverse side effects.
Recommendation 2: On-street and off-street parking fees should be restructured to support more efficient usage of parking space. On-street parking fees should be based on occupancy rates in order to minimize time spent searching for parking while maintaining reasonably high utilization rates of parking space. Maximum-stay regulations should be replaced by escalating hourly rates in order to encourage parking space turnover while minimizing inconvenience on parkers and effort devoted to enforcement and fine administration. The Toronto Parking Authority can implement such measures within the City of Toronto. To control risks, implementation could begin with a limited-scale trial with expansion to follow conditional on successful experience.
Two parking-related instruments can be used to raise money from parking directly: commercial parking sales taxes and parking levies. The GTHA does not currently have a commercial parking sales tax. A parking levy is a special property tax that is applied to non-residential, off-street parking space. A tax on commercial property was introduced in the Greater Toronto Area in the early 1990s to fund public transit and roads. It did not function as planned, and it was repealed after three years. However, the problems could be alleviated by designing and operating the levy judiciously. Parking levies are flexible in scope and rate structure, and they do not require parking activity to be recorded. They also have a large revenue potential.
Recommendation 3: The GTHA should consider implementing either a commercial parking sales tax or a parking levy. Responsibility for either measure could be granted to each municipality in the GTHA, or to the two cities and four regions in the GTHA, or to a governing body such as Metrolinx. However the commercial parking sales tax or parking levy is administered, tax rates or levies should be coordinated to avoid significant differences between municipalities that would encourage wasteful diversion of traffic and parking activity across municipal boundaries to take advantage of lower rates.
Like parking, usage of roads while traveling is inefficiently priced. A large fraction of the costs of vehicle ownership are fixed and do little to constrain usage. Fuel taxes are a crude form of user charge, but they are a blunt instrument for tackling congestion which varies greatly with location and time of day. Tolls are a much more effective instrument for targeting congestion and they can also be used to charge for road damage and pay for infrastructure. Tolls are scarce in Canada, and Highway 407 is the only tolled facility in the GTHA. Yet road pricing is widespread in other countries and it has been implemented in various forms.
Recommendation 4: Road pricing using time-varying tolls is the most attractive funding scheme for the GTHA in terms of adhering to the user-pay principle, economic efficiency, consistent and sustainable revenue yield, and equity. The two most promising options are: (1) a network of high-occupancy toll lanes, and (2) tolling all lanes on 400-series highways and possibly major regional and municipal roads. Both options should be energetically pursued. HOT lanes are the smaller-scale and less-risky option, but it will take time to build out the network. HOT lanes also have less revenue potential than more broadly-based road pricing schemes. Tolling highways should begin either after part of the HOT lane network is up and running, or at the same time.
In combination, reform of transit fares and parking pricing, a regional parking tax or levy, and some form of comprehensive road pricing might yield enough revenue to fund The Big Move. If not, one or more other funding instruments will be needed. A number of
possibilities are reviewed in this report. The leading candidates appear to be a regional fuel tax, a vehicle levy, and a regional sales tax. A fuel tax is ideal for internalizing the costs of greenhouse gas emissions, but it is a blunt instrument for controlling congestion. However, this should not be a limitation if efficient pricing of parking and roads is introduced. A vehicle levy is simple to collect and administer, and the City of Toronto has experience with the recent Personal Vehicle Tax. A vehicle levy throughout the GTHA would raise several times the revenue. The main strengths of a regional sales tax are its large revenue potential and the fact that it is paid by commuters and visitors as well as residents. Because of its broad base, and the relatively low level needed, a sales tax could be seen as a fair way for everyone to contribute toward a good regional transportation system.
Recommendation 5: Consideration should be given to implementing a regional fuel tax and/or a vehicle levy and/or a regional sales tax in the GTHA. The governing body would be responsible for setting the rate and spending the revenues. To reduce costs, a collection and administration levy could be piggybacked onto the corresponding existing tax.
Gaining public and political support to introduce new funding instruments and expand existing ones is essential for any plan to succeed. Experience around the world offers several lessons. One is that any scheme should have a clear and publicly stated objective. Pursuing multiple objectives is attractive from a system optimization perspective, but it is liable to create confusion. A second lesson is that the public should be engaged at all stages of implementation through consultation, focus groups and other media. While he was mayor of London, Ken Livingston played a key role in implementing the London Congestion Charge, demonstrating that a political champion is helpful for bringing in controversial measures. A third lesson is that revenues should be dedicated to local transportation. Good public transit is considered highly desirable – if not essential – if measures are introduced to make driving or owning vehicles more expensive. The fact that public transit investments form the lion’s share of The Big Move is a major plus.
Recommendation 6: A funding plan should be designed and presented to the public with simple, consistent objectives. The revenues should be dedicated to specific projects and ring-fenced in such a way that other revenues are not reduced in an offsetting manner. To the extent possible, public transit investments should be expedited, and the effects on modal shares and travel times measured regularly and conveyed to the public to demonstrate progress."
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"Where architectural imagination is absent, the case is hopeless." - Louis Sullivan
Last edited by thistleclub; Jan 29, 2013 at 1:53 PM.
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