Sunday, November 08, 2009

fare taxes

CATCH News – November 3, 2009
Higher bus fares versus higher taxes
It would cost the average Ancaster household less than $2.50 a year to avoid an HSR fare hike that would add over one hundred dollars to the expenses of a regular adult bus rider. Differential transit taxes mean a Hamilton home of similar value would pay just over $11 a year to keep bus fares at their current levels (see table).
The proposed twenty-cent-a-ride fare hike has sharply divided councillors. It is intended to raise $1.9 million which is about 4.2 percent of the $45 million in property taxes collected for HSR services this year.
An Ancaster home valued at $300,000 currently pays $58 a year for the HSR. A similar priced home in the former city of Hamilton pays $266 a year with households in the other former municipalities falling in between these two extremes – Waterdown $60, Dundas $65, Stoney Creek $85 and Glanbrook $114 (see table).
About 15 percent of households are rural and they neither receive HSR service nor pay any taxes towards its operations. All households receive DARTS service and share equally in its costs. The variable tax rates in the urban areas are a carryover from before amalgamation ten years ago when the former suburbs purchased transit service from Hamilton.
The proposed twenty cent HSR fare hike would raise the adult pass by $9 a month or $108 a year. Cash fares would rise to $2.60 a ride from the current $2.40.
Council has instructed city staff to limit increases in departmental budgets to no more than two percent, a directive made more difficult by already approved wage increases in the three percent range. The HSR faces the additional problem of a three percent drop in ridership that is expected to cut $1.3 million from its revenues this year and in 2010.
After squeezing other spending, the transit division is $1.9 million over the two percent target – an amount that it thinks can be recouped by the 20-cent-a-ride fare hike. However that could be optimistic because it assumes no drop in the number of passengers who will pay the higher fares to ride the bus.
The inconclusive outcome of last week’s debate on the HSR budget reflects the division between transit promotion and higher taxes, and largely pits suburban councillors against their colleagues in the former city of Hamilton. It’s further complicated by this being the last city budget before municipal elections next fall.
On October 29, five councillors endorsed a 20-cent fare hike – Dave Mitchell, Maria Pearson, Rob Pasuta, Russ Powers and Mayor Fred Eisenberger. That proposal went down to defeat 8 to 5 – the same fate that met an earlier move to raise fares by 10 cents that was supported by Mitchell, along with Chad Collins, Scott Duvall, Tom Jackson and Terry Whitehead.
Together that makes nine councillors supporting a fare hike. Four others voted against both proposed increases – Bob Bratina, Brian McHattie, Sam Merulla and Bernie Morelli – and three were absent – Brad Clark, Lloyd Ferguson and Margaret McCarthy.
A fare hike won’t entirely eliminate a rise in transit taxes, but it will lower the budget increase to the approved two percent increase. If there is no fare hike, the tax hit for the HSR will be 6.2% per household, or about $3.60 per household in Ancaster and $16.50 in old Hamilton.
The actual tax hike will also vary according to the assessed value of each house. A higher percentage of suburban residences exceed the $300,000 figure than the homes in the older parts of the city.
Much of last Thursday’s debate focused on whether or not to shift some capital dollars to the HSR operating budget, a move suggested by transit staff but not recommended by the finance department. That would have covered half of the budget overrun and reduced the fare hike to 10 cents per ride.
McHattie announced he’s pursuing an alternative option that would add $3 million to the HSR operating budget by shifting provincial gas tax monies from the capital budget to the operating side of the ledger and replacing the capital dollars with federal gas tax monies.
The latter monies were originally earmarked by the federal government for transit use only in cities over 500,000 population, but Hamilton fell below that threshold initially and the rules have subsequently been broadened to allow allocation to other capital expenditures. At this point, about half the annual subsidy of $79 million is being used for waste management facilities, with the remainder split between road construction and the renovations to city hall.
The fare hike is expected to be debated and voted on again at the November 11 city council meeting.
Taxes for HSR on a $300,000 home within the transit service area
and effect of avoiding a proposed 20 cent per ride fare hike
HSR taxes
per household
4.2% increase
to avoid a
fare hike
2% increase
fare hike
Total HSR tax
increase with
no fare hike
Stoney Creek
Rural areas

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