Provincial money supports transit operation
December 17, 2005

Up to half of provincial gas tax monies can be used for the operating expenses of the HSR and DARTS, Peter Coghill of the Ministry of Transportation told a city transit committee this week. That's good news for transit director Don Hull who previously feared that the annual $12 million subsidy was going to be reserved for capital spending such as the purchase of additional buses.

But Coghill also told the city's transit master plan steering committee on December 13 that the provincial monies can only be used for transit improvements, not to pay for rising costs of the existing system. "All gas tax spending must be incremental to baseline spending towards increasing transit ridership only," said Coghill.

That scuttles the city's plan to repeat this year's use of gas tax to cover inflationary cost increases. In the 2005 budget, councillors allocated $1.5 million of the provincial monies to pay for rising salaries and fuel costs. The spending was justified as "in lieu of a fare increase" which would have reduced ridership.

The city had planned to use another $1.5 million in 2006, at the same time as imposing a 15 cent per ride fare hike for both HSR and DARTS. Coghill made clear that won't be allowed. While the province recognizes the value of fare reduction or deferral in supporting ridership, it will only allow gas tax monies to be used for such a purpose once every three years.

Coghill also re-emphasized the province's "most important priority" for the gas tax is to increase transit ridership by supporting expansion and service improvements.

The clarification of the provincial rules complicates the budget challenges facing councillors. They will now have to find the $1.5 million from the city's budget or taxpayers, plus an additional $1.4 million to avoid a proposed fare increase. The latter amount is what HSR officials believe a 15 cent hike in ticket prices will generate for the city, although they also acknowledge such a fare hike will mean 855,000 fewer passengers in 2006.

Two years of no fare increases have resulted in growing ridership that has added $600,000 to HSR revenue. Prior to that, frequent fare hikes were accompanied by steep ridership declines, with annual totals dropping from 29 million down below 20 million over a decade and a half.

The province can't prevent a fare increase, but loss of riders will mean less subsidy. It is calculated primarily on the basis of ridership - the more riders, the more provincial money. Last month Hull praised the provincial and federal government for "putting their money where their mouth is" in financially supporting transit and told councillors that "reducing ridership is absolutely counter-intuitive to the federal and provincial goals to support increased transit ridership".

Nevertheless, Hull is recommending the 15 cent fare hike. He believes there is "some tolerance for a fare increase" this year and that "there is no reasonable expectation that the ridership growth that we have been experiencing the last couple years will offset the expected expenditure increases".

A decision on raising bus fares has been put off by council until the new year and likely won't be taken until February. The staff evaluation and recommendations can be examined at
http://www.myhamilton.ca/NR/rdonlyres/DC9E881A-EB61-4879
-A3A3-0368F5C80F95/0/Nov28PW05125.pdf.