Staff Report #12
April 13, 2023
To All Commissioners
Re: Provincial and Federal Budget Update
Recommendation
That the report be NOTED and FILED.
Background
Over the past several weeks, both the Province of Ontario and the Canadian Federal government have released their 2023 budgets. Advocacy with respect to funding for public transit is undertaken at the Provincial level through the Ontario Public Transit Association (OPTA) and at the Federal level through the Canadian Urban Transit Association (CUTA). Both associations provided input into pre-budget consultations, details of which is set out below.
Provincial Budget
The pre-budget submission from OPTA included two priorities, each of which is discussed below.
1. Funding to offset public transit operating shortfalls in 2023
Throughout the pandemic period, the Provincial government, in partnership with the Federal government, provided funding to offset the impacts of operating a public transit service during a pandemic. This funding was critical as it allowed transit services to continue to operate at levels that ensured ongoing community access during a time when ridership levels and their associated revenue had dropped significantly. While the impacts of the pandemic have lessened significantly, ridership levels have still not returned to pre-pandemic levels, leaving transit systems short revenue. The results of a survey of Ontario transit systems indicated an anticipated operating budget shortfall in 2023 of approximately $510 million. In London’s case, the estimated revenue shortfall in 2023 associated with ridership shortfalls and expenditure increases is $6.9 million (see Staff Report #5 dated April 13, 2023).
There was no funding of this nature included the Provincial budget tabled on March 23, 2023.
2. Ensure the Provincial Gas Tax for Transit top-up remains in place
The Provincial Gas Tax for Transit (PGT) program provides an annual allocation to transit systems in Ontario which can be utilized for operating or capital programs. The annual allocation is based on $0.02 for every litre of gasoline sold in the province in the previous year. During the pandemic, fuel sales dropped significantly as people travelled less, and as a result, the overall allocation generated from the funding formula was reduced. During the pandemic, the Province provided a “top-up” of funds to the allocation to the pre-pandemic level, maintaining the fund at approximately $379 million. Transit systems across the province rely on this sustainable source of funding for both operating and capital programs. Given the significant increases in fuel pricing and the corresponding lower volume of fuel sales, OPTA encouraged the government to continue with the “top up” funding for this program going forward to continue to provide systems with a reliable source of funding, which in many cases, had been built into multi-year budgets.
While there was nothing specific in the Provincial budget with respect to the PGT program and requested top-up funding going forward, the Province did confirm on March 1, 2023 that the 2022/23 PGT program would include supplemental funding to get the annual allocation to $379 million. Further details with respect to the status of the Provincial Gas Tax Reserve Fund are set out in Staff Report #3 dated April 13, 2023.
Federal Budget
The recommendations from CUTA with respect to the Federal budget included the following.
1. Funding to offset public transit operating shortfalls in 2023
As indicated earlier in this report, the operating support that was provided to transit systems during the pandemic period was a partnership between the provincial and federal governments. Consistent with the recommendation from OPTA for the provincial budget, CUTA encouraged the federal government to continue the partnership to provide operating support to transit systems for 2023.
Notwithstanding the confirmation from the provinces of British Columbia and Quebec that provincial operating funding support would be provided to transit systems for 2023, the federal budget, which was announced on March 28, 2023, did not include any programs to provide operating funding support for transit systems in 2023.
Summary
As set out in Staff Report #5, dated April 13, 2023, the lack of operating support in 2023 is anticipated to result in a $6.9 million operating shortfall which will need to be funded through the use of reserves and/or reserve funds.
Recommended by:
Kelly S. Paleczny, General Manager