Politicians in Mississauga say they’ll support a light rail project, but only if somebody else picks up the tab.
Mississauga City Council says it will not put any of its own tax dollars at risk to fund a light rail transit (LRT) project on the city’s main thoroughfare, a refusal that highlights the economic risk such vanity infrastructure projects pose to residents and transit users alike. This project – like many others under consideration for the GTA – is only viable when other people or governments pick up the tab.
In this case, Mississauga’s city manager Janice Baker says that if even one-third of the $1.6 billion dollar LRT (known as the Hurontario LRT) is assigned to Mississauga taxpayers – the province or federal government would cover the cost of the other two-thirds – the impact “would be so onerous as to be impossible.”
Mississauga’s recently elected mayor Bonnie Crombie, the successor to long-time incumbent Hazel McCallion, added that anything less than 100 percent outside funding would prompt council to undertake “a very serious discussion … on if we want to proceed with it.”
They are right to be concerned. Other transit agencies, such as the TTC, typically assume major infrastructure projects are prone to cost overruns of about 30%. If that figure is applied to the Hurontario LRT, the final price tag would reach $480 million higher than the current estimate, or around $2.1 billion. In total, that comes out to $10,656 per Mississauga household, not including an ongoing operating deficit.
For perspective, the Eglinton Crosstown project in Toronto – which is a partially buried LRT – has a price tag of $5.3 billion, or around $4,800 per Toronto household.
Mississauga’s transit agency already relies on subsidies to cover its expenses – a tab picked up by the city’s taxpayers. Even with record ridership, the agency’s finances have become more of a drain on city coffers. A decade ago the transit agency recovered about 60% of its operating expenses through fares. A major expansion over the last ten years has seen that farebox recovery ratio fall to 45%.
Adding an expensive light rail project will increase those operating deficits. The only way to try and tame the growing deficit will be through hiking fares and property taxes. Transit fares have been hiked annually for the last four years to try and offset the agency’s growing operating deficits – to no avail. Property taxes, meanwhile, have increased by around 5 percent annually over the same period.
The city already faces a massive infrastructure deficit. According to the most recent estimates, Mississauga needs more than $116 million each year to fund repairs and maintenance, as well as save for future repairs and replacements. But the city only raised $32 million last year, leaving an infrastructure deficit of $91 million. Officials estimate that Mississauga is facing a $1.5 billion infrastructure over the next 20 years.
Adding the Hurontario LRT would only exacerbate the financial pressures already facing the city, while ensuring that fare increases will continue unabated. The prospect of soaring fares and a slashing of transit routes and schedules already in place – mixed with faster-than-inflation property tax hikes – is reason enough for politicians to back away from another economic drain.
Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org or at (416) 964-9223 ext 236.