Transit and subsidizing Provincial responsibility

I mentioned in one of my previous posts that sooner or later City Council will have to start making some hard and potentially unpopular choices. I’m going to outline one of them here.

Back in 2006 the City made an agreement with the Province to provide discounted bus passes to people who were clients of social services. Currently if you are receiving benefits from the Saskatchewan Assistance Plan (SAP otherwise know as “welfare”), the Saskatchewan Employment Supplement (SES), and a couple of other programs, you can purchase a discounted bus pass for $27. The Province currently pays the City $24.50 for each of these passes. This is a significant discount from the full retail price of an adult pass ($81), or even the “low income discount” of 20% (or $64.80) that Saskatoon Transit offers (since 2010) to people who meet the threshold.

Now this effectively means that the City is picking up an expense that should be paid for by the Province. If the Province wants the people in the aforementioned programs to have a bus pass, the Province should be purchasing them from Saskatoon Transit at the full retail price, or at least the 20% low income discount price, which is also the same as the price of the Eco-Pass offered to employers.

Based on the numbers from the City’s financial statements, and the 2014 and 2015 budgets, the City effectively has lost or forgone between $8 million and $16.5 million dollars in revenue since 2006. Enough money to put between 20 and 40 new buses on the road, a big dent in the capital replacement shortfall.

Lost Rev 1

 

Lost Rev 2

 

Now I’m sure I’ll get some hate mail from people assuming I think this discounted bus pass program should end. That’s not what I am suggesting. This is something the Province should be paying for. By off loading this onto the City the provincial government is depriving Saskatoon Transit of badly needed funds. The Provincial Government provides no funding for public transit at all (unlike most other provinces), and this sweetheart deal understates their own expenses with respect to the cost of providing social assistance to people who need it.

The Province should be funding public transit, as most other provinces do. If the Province also wants to provide bus passes for recipients of various provincial assistance programs (they should), then the Province should be purchasing them at the regular retail price, or at the very least, the same discount offered to low income residents or Eco Pass customers.

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7 thoughts on “Transit and subsidizing Provincial responsibility

  1. Lila Wagner

    In additon to offloading transit costs onto the municipality, the province is also offloading food costs onto the food banks–welfare budgets are calculated with an assumption that social assistance recipients will access the food bank.

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  2. just me

    Transit wouldn’t get the money anyway, though. It would have been swept into the general city revenues and spent on roads or to reduce property tax increases.

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    1. sksimon Post author

      I disagree. If the Province had to buy passes from transit at regular retail price that would be revenue to transit. There would be no point to reallocating transit revenue to other uses since transit doesn’t generate enough revenue to cover expenses anyway. More direct revenue earned by transit would reduce the “subsidy” that transit receives, funded by property taxes.

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  3. just me

    Revenue doesn’t go to transit though, revenue goes into general funds. That’s how it works, internally. Transit doesn’t get to increase their expenditures if they increase revenues – they’re still held to the same allowable increase as others, and all the revenues get swept together. Transit brings in revenues to the city as a whole, not to transit.

    I wasn’t saying it as something to agree or disagree with, I was explaining how things work at the city.

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    1. just me

      Oh, and there is no “subsidy” – all the revenues are pooled, all the expenditures are pooled. The difference between the two is paid for by property taxes (simplistically).

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      1. sksimon Post author

        Yes the difference between revenue and expenses is paid for by property taxes. Which means that any additional revenue generated by transit reduces that amount. That’s part of my point. This special deal that the Province is getting dramatically reduces the amount of revenue Transit generates. My argument is that the Province should be purchasing passes for at least the same 20% discount offered to low income customers and the ecopass.

        As a general rule, when one level of government purchases services from another level of government the purchaser typically offers at least an amount based on cost recovery and the provider usually accepts nothing less (this happens within the City itself too, between departments), but that is not what happens in this deal. In fact, if the Province was to actually pay full cost recovery, that amount would be much higher than the full retail price of a bus pass, about 160% of the full retail price.

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  4. just me

    See my first point though – the money wouldn’t go to transit, it would be spread out among all the city operations. That was my entire point. Yes, additional revenues help to reduce property taxes increases, but that money wouldn’t go to transit.

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