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Gee: Smitherman's plan simply a transit lover's fantasy

How on earth will the city pay for the mayoral candidate’s
ambitious proposals?

By Marcus Gee

George Smitherman says on his website that city hall cannot “keep spending and expanding no matter what the cost.” Instead, the city needs to “fit our budgets to our means.”

On Friday, the very same George Smitherman announced a plan to spend $7-billion on new transit lines - with barely a hint of how he would pay for it.

The Smitherman plan, released at a slickly organized downtown fundraiser for his mayoral bid, is a transit lover’s fantasy. Between now and 2020, he would do everything from building a new Sheppard West subway to extending the Bloor subway line to Sherway Gardens to fast-tracking the extension of the Spadina subway to York University.

Mr. Smitherman called the plan both “ambitious” and “affordable.” Reckless and irresponsible might be better.

Seven billion is a lot of money for a city with an annual operating budget of $9.2-billion. Where on earth would a city with chronic money problems find that kind of cash? Well, simple: Mr. Smitherman’s Toronto would take out a loan. Why didn’t anybody else think of that?

Mr. Smitherman says he would contract with private companies to build the transit lines, leaving the city to pay for them “over time.” “This model,” he patiently explains, “is most similar to a mortgage model used by many of us to achieve the joys of home ownership before we have all of the money to pay for the full purchase price.”

But what would it do to a city that already carries a debt of $2.5-billion to add nearly three times as much to the total? Toronto already pays out about $450-million a year to service its existing debt. Piling on billions more would add hundreds of millions to the interest we pay, stealing resources away from city services.

What is worse is that Mr. Smitherman seems to have no idea how the city would pay off this massive transit loan. Others have proposed to finance transit expansion by imposing road tolls (Sarah Thomson) or selling Toronto Hydro (Rocco Rossi). Mr. Smitherman has ruled out both.

In fact, he would reduce the city’s revenues by lowering the vehicle registration tax, probably by one-third, and giving seniors a free ride on the TTC from 10 a.m. to 2 p.m. on weekdays. This from a man who said in December that “there can be no real room for pretending that we can increase budget expenditures without increasing city revenues.”

His only solution, if you can call it that, is to set up a special trust fund, the Transit Trust, to collect money to pay off the loan. He would fill this “segregated account” with the revenue that flows from Toronto Hydro, the Toronto Parking Authority and the city’s share of the provincial and federal gas taxes (it would also take in money that might - maybe, if it works out - be generated from building development along the new transit lines).

There is one tiny problem: This money is already spoken for. Parking fees and Hydro revenues go into the city’s budget to pay for things like parks and housing and road repairs. Much of the gas-tax money goes to, well, transit. So Mr. Smitherman would pay for new transit lines by robbing the transit budget? In back alleys they call this a shell game.

Mr. Smitherman says he would put aside money for transit by holding the line on wage increases for city workers and cutting unnecessary expenditures, ideas as antique as Old City Hall and proposed by just about every candidate for mayor. They do not remotely amount to a plan.

Not to worry, says the candidate, the details of how he will fund his extravagant transit rollout will come in a “financial, fiscal plan document” that he will reveal in September or October - that is, just before the election on Oct. 25.

Not soon enough, sir. A former deputy premier, Mr. Smitherman bills himself as a man of experience, the old pro who knows how government works and how to get things done. Is it too much to expect that before making a $7-billion promise he would figure out how to pay for it?