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Ontario missing more than half the money needed to start new transit funding

Ontario Finance Minister Charles Sousa delivers the 2014 budget next to Premier Kathleen Wynne at Queen’s Park in Toronto on Thursday, May 1, 2014.

Nathan Denette/THE CANADIAN PRESS

The Ontario government has found less than half the money needed to start funding the next decade of transit investment for the Toronto area and will rely on borrowing, asset sales and hitting up the federal government for the rest.

Thursday's budget promises about $1.7-billion in transit investment this year – part of a $15-billion plan over the next 10 years. The government is arguing that this can be done at minimal cost to residents, completing the reversal of a long campaign to find public support for new sources of revenue. The only measure that would affect Ontarians directly is a four-cents-per-litre raise in the tax on aviation fuel, phased in over four years.

Saying that transit can be built in the Greater Toronto and Hamilton area without substantial new money is an acknowledgment of the power held by the New Democrats, who must support the government to keep it alive and have been loath to put an additional burdens on the public.

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New Democrat Leader Andrea Horwath refused to comment Thursday on the budget.

For more than a year the Liberals had argued that transit could not be funded from existing revenues, with Premier Kathleen Wynne telling The Globe last spring that the "reality is we need more money than we've got in the provincial treasury in order to build transit."

Also in the last year, both the province's transit agency, Metrolinx, and a panel set up by the government recommended new revenue tools that would raise the bulk of the money needed for transit. But all of the options proved unpalatable to the opposition, leading to a long slow climbdown by the Liberals. Instead, the government is planning to raise about $1-billion this year by borrowing money, selling assets and looking for assistance from Ottawa. Most of the remainder would come through redirecting of part of the existing gas tax.

"This is all about connecting communities in the GTHA," said Finance Minister Charles Sousa. "We recognize the concentration of population exists in the area and that's where the majority of the gridlock and the congestion is occurring."

The plan received qualified praise from some who had pushed for transit funding.

Toronto Region Board of Trade president Carol Wilding argued that "the long term stable financing solution must give greater weight to a more robust regional revenue solution." And Sevaun Palvetzian, CEO of the advocacy group CivicAction, said there were "question marks … around whether the sources outlined will collectively cover the costs."

The money for GTHA transit would be split among priorities identified by Metrolinx and other projects, with a surface transit line on Toronto's waterfront identified as one possible example.

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Projects would be prioritized through "rigorous business-case analyses" conducted with Metrolinx and the municipalities, the budget promises. "You've got to take the politics out of planning," Mr. Sousa said.

The money will come from dedicating 7.5 cents of the existing gas tax and the HST currently charged on gas and diesel toward transportation infrastructure, together raising $680-million this year. The budget also calls for clamping down on large corporations claiming a small-business tax credit, restricting a fuel tax exemption for road-building machines and raising the aviation fuel tax, collectively raising $33-million. Another $650-million would come from the sale of assets through a fund to be dedicated to infrastructure and by working with the federal government to secure money, categories that are lumped together in the budget. Borrowing is expected to raise a further $380-million this year.

In future years, unspecified revenues from high occupancy toll lanes, which are yet to be built, would be applied as well.

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About the Author

Oliver Moore joined the Globe and Mail's web newsroom in 2000 as an editor and then moved into reporting. A native Torontonian, he served four years as Atlantic Bureau Chief and has worked also in Afghanistan, Grenada, France, Spain and the United States. More

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