CBI BLOG

Time to get road pricing right

By January 31, 2017 No Comments

Premier Kathleen Wynne recently announced that the Province of Ontario will not give Toronto council permission to toll the Don Valley Parkway and Gardiner Expressway. This disappointing decision has important ramifications for all GTA residents, whether they drive cars or not.

This rejection behooves us to go back to the drawing board and get road pricing right, both in terms of how it is implemented and with regional support and benefits. An effective regional road pricing plan should not just raise funds for Toronto but help reduce congestion and build transit across the entire GTA.

This rejection behooves us to go back to the drawing board and get road pricing right, both in terms of how it is implemented and with regional support and benefits. An effective regional road pricing plan should not just raise funds for Toronto but help reduce congestion and build transit across the entire GTA.

Road pricing has huge potential to raise revenues and provide an incentive for drivers to leave their cars at home and take transit or carpool, reducing both congestion and greenhouse gas emissions. These results have long been goals of major planning policies including the city’s Official Plan, The Growth Plan for the Greater Golden Horseshoe, the Ontario’s Climate Change Action Plan, the Proposed Growth Plan update, and the Provincial Policy Statement.

The Premier’s rejection of road tolls doesn’t just deviate from provincial objectives, it also makes for a quick about face for the Ontario government. A short time ago Premier Wynne expressed the province’s support for Toronto road tolls: “If Mayor Tory and his council determine that they would like to embark on a tolling of certain roads — local roads in the city of Toronto — then we will work with them.”

This change has been especially irksome to Mayor Tory and city councillors who did the heavy lifting that Premier Wynne requested. They thoughtfully discussed and advocated for a policy that is typically seen as a political hot potato.

In place of road toll revenue, Premier Wynne has promised that the government will increase gas tax funding for all municipalities, including Toronto. The additional funding from gas taxes is an improvement from the status quo, but there are problems with the Province’s plan.

As Mayor Tory has pointed out, Toronto’s share of the increase in gas tax funding ($170 million) will likely fall short of revenue from the proposed tolls on the DVP and Gardiner. With the Province providing the funding, Toronto will not control the revenue and, as a result, the city will remain at the mercy of the province for transit funding. There are also budget implications for the Province. This is not new money, the gas tax is not being raised, so somewhere in the budget Peter is being robbed to pay Paul; allocating more finite funds to transit means spending less on other important budget items that make the GTA a desirable place to live.

Furthermore, unlike road tolls, simply dedicating more gas tax money to transit does not provide an incentive for drivers to leave their cars at home, meaning it is unlikely to reduce congestion or greenhouse gas emissions.

Closing the Gap on Toronto’s Budget

It is important to remember that the tolls were not the full solution to the City’s current budget woes. Toronto needs additional sustainable revenue for its current budget shortfalls which include far more than just unfunded transit projects. These shortfalls, which are starting to feel like annual rituals, hurt our most vulnerable residents. Without proper funding, Toronto’s poverty reduction plan has failed to get off the ground, TTC fares have risen faster than the pace of inflation, there is a lack of affordable housing units and the units that do exist face a long backlog of required repairs, not to mention large capital projects like Rail Deck Park and Mayor Tory’s plan to rebuild the Gardiner.

While never politically attractive, the City Manager’s office viewed raising property taxes as one of the fairest and easiest options available to the city. With property taxes per household well below the GTA average and Toronto homeowners earning a windfall from the rapid rise in land values—last year the average homeowner saw their house increase in value by about $100,000, a number that outstrips Toronto’s median household income—increasing property taxes does not just make financial sense, it is fair and progressive city-building policy.

If not property taxes, the City Manager’s report outlined a variety of other revenue tools the City could consider, such such as re-introducing the the motor vehicle registration tax.

Ultimately, the increase in gas tax funding is welcome and road tolls would have been a big step forward, but neither can fulfil the funding needs of the City.

Getting Road Pricing Right

Even though road tolls are not the panacea to Toronto’s budget crisis, the rejection of the toll proposal hurts because, when implemented properly, road pricing is extremely effective. Road pricing provides both new revenue and encourages drivers to consider alternative commuting methods such as transit, carpooling, or shifting to off-peak times. These benefits mean more money to maintain our roads and build transit, alongside reduced congestion and greenhouse gas emissions.

Effective road pricing can also lead to savings for drivers. A 2015 Pembina Institute study found that the right price would reduce congestion and result in savings for drivers based on their decreased commute times, and savings in gas and car maintenance from reduced idling.

To maximize the benefits of GTA road pricing, tolling Toronto’s highways is not enough. If the focus is on reducing congestion, as it should be, then a form of congestion pricing or a per kilometer charge on driving at the regional level would be more effective. Time of use pricing—charging more during peak travel periods and less (or even nothing) during off-peak times—could also be considered. This approach has proven successful in other jurisdictions and researchers such as University of Toronto engineering professor Baher Abdulhai have shown that dynamic pricing has a number of advantages over flat tolls, including incenting drivers to consider making their trips outside of peak travel times.

Toronto’s plan to toll the DVP and Gardiner offered the opportunity to seriously discuss and trial road pricing—a major opportunity that is now gone. With that said, it was never an ideal solution for the region. It was primarily a revenue-driven proposal that benefitted only Toronto and let most drivers off the hook at the expense of those who rely on the Gardiner and the DVP.

A new goal moving forward should be to develop a more fair and more regional road pricing plan. Working towards such a proposal will not be easy and will require immense political cooperation across geographic and ideological lines. But with congestion choking our region, and the need for new revenue at both the Provincial and Municipal levels we can no longer keep avoiding the conversation about road pricing.

Our politicians, especially those at the provincial level, might be loath to admit it, but the opportunity will never be better than it is now. Toronto’s leaders put their political differences aside and started the road pricing conversation in earnest. Meanwhile, other GTA mayors, including those in Mississauga, Vaughan, and Oakville, have suggested that they are not opposed to the idea.

The City and Province can come together to build on this momentum and work towards a regional road pricing plan that reduces congestion and raises much needed new revenue for regional transit projects. This new plan would benefit both the 416 and 905 and represent a major victory for our entire region.

Graham Haines is the Research Manager with the Ryerson City Building Institute.