Lessons from Abroad about Transportation Governance
By André Côté, Manager of Programs and Research for the Institute on Municipal Finance and Governance (IMFG), an academic think tank at UofT that focuses on the fiscal health of city-regions.
Transportation governance doesn’t capture attentions like talk of new subway investments or road pricing mechanisms, but it is no less important. For global city-regions like the Greater Toronto and Hamilton Area (GTHA), planning, coordinating and financing transportation services is an enormously complex task. While some local services can be provided efficiently and effectively within a municipality, transportation spills over municipal boundaries requiring mechanisms to coordinate its delivery across the broader metropolitan region. As the Organisation for Economic Co-operation and Development (OECD) points out, the absence of effective regional governance can create a number of problems: high transaction costs and coordination gaps between local transit operators, political uncertainty or dysfunction in making planning and investment decisions, or the inability to exploit economies of scale.
A scan of major city-regions around the world reveals that while most have regional governance mechanisms, the models and mandates vary. For example, in Hong Kong, the regional transportation authority (RTA) has been privatized with the government as the majority shareholder. Conversely, in Australia transportation is coordinated on a metropolitan-wide basis by the state government. Some RTAs are the direct operators of transit services or overseers of road networks; others, like the Metropolitan Transportation Commission for the San Francisco Bay Area, play a coordinating role among local governments and operators.
RTAs are commonly structured as government agencies or special purpose bodies. The arm’s length relationship with government limits political interference with operational decisions, while retaining political accountability at the national, state or local level through appointed boards of directors. They generally have professional staff, public consultation and reporting requirements, and a mandate for planning, budgeting and, in some cases, operating transit services.
Most RTAs also have access to dedicated sources of revenue. Montreal and Vancouver have regional gas taxes. Transport for London has the local congestion charge. The Paris and Portland, Oregon RTAs rely on payroll taxes. Chicago, New York and Salt Lake City all have dedicated sales taxes. In some cases, the RTAs directly levy the taxes or charges; in others, the dedicated revenues are transferred by state or local governments to regional authorities or local operators. Many RTAs can also borrow on financial markets, increasing their project financing flexibility. For example, in Los Angeles County, the RTA issues debt to finance transit investments backed by dedicated sales tax revenues.
Closer to home, how does Metrolinx stack up as the regional authority for the GTHA? As an arm’s-length provincial agency, mandated with transportation planning across the region and operational responsibility for the GO Transit commuter service, Metrolinx shares many characteristics with the RTAs in Montreal, Vancouver, New York, Chicago and other city-regions. However, it is distinct in a couple of important ways. First, Metrolinx relies entirely on fares and provincial subsidies for funding. It has no stable, dedicated revenue sources and lacks the ability to borrow. This creates a challenging environment for long-term planning and investment. Second, Metrolinx’s provincially-appointed Board lacks the public or municipal representation present in most other jurisdictions, which has raised concerns about accountability to local governments and residents.
They might be dull, but these issues will nevertheless be critical as the discussion heats up across the GTHA about transportation finance.