Local and Regional Funding Mechanisms for Public Transportation (2009)

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62 Outside the United States, long-standing philosophies of governance, intergovernmental roles, taxing philosophies, and traditions in public service delivery vary dramatically, making it difficult to draw lessons directly from comparisons of local and regional funding techniques. A concurrent study being conducted at the Massachusetts Institute of Technology (MIT) has noted, however, in the European Union a growing effort to “devolve” financial responsibility for public transportation to the regional and local level, reducing what has been substantial historic reliance on central governments for transit funding and finance.80 The MIT study focused more on shifting intergovernmen- tal roles, relationships, and authority (both operating and financial) than on specific sources of funding. Unfortunately, it defines and characterizes local and regional funding sources inawaythatwill be not be particularly useful to the TCRP H-34 project, e.g.: • Small discrete revenue streams, including such things as bridge and tunnel tolls, parking taxes and fees, and conges- tion charges; • Mandated fare recovery ratios (the rationale for which is to constrain demand for public funding); • Funding contracts, largely between “sponsoring govern- ments” and service providers, i.e., purchased services; • Formulas or revenue sharing that, for the most part, refer to redistribution of taxes collected at the federal level and allocated to regions, and from regions to munic- ipalities; and • Direct special taxes for public transportation either levied by the authority or levied for exclusive use on tran- sit services. Some information on specific transit funding sources at the local level has been identified from the MIT work, and supplemented by more current information obtained by team members: • Paris—Syndicat des Transports d’Ile-de-France (STIF): – STIF is an umbrella “organizer” of public transportation in the Paris region, setting fares and guiding financial management for the Régie Autonome des Transports Parisiens (RATP), the major multimodal regional oper- ating agency, Societé Nationale des Chemins de Fer (SNCF), the national intercity rail operator, with branded commuter service in the region, and OPTILE, a suburban bus association; – A regional payroll tax accounts for roughly 50 percent of all STIF non-fare revenues and is dedicated to transit (Le Versement de Transport, or VT). The VT was cre- ated by national legislation in 1971 to provide transit funding across France; its maximum rate is set by the national government and it is collected from all firms with more than nine employees in municipalities over 10,000. In the future, the rate cap authority may be devolved to the Paris region, the Région-Ile-de-France. The VT currently provides 36 percent of all revenue for transit in the country; and – Other “subsidies” (unspecified) are provided by the national government (11 percent), municipalities (depart- ments) (9 percent), Region-Isle-de-France (6 percent), and other sources (3 percent). As increased autonomy is developed by the national government to the regional level, ad-hoc funding by the national government for cap- ital projects (e.g., LRT in particular) has been eliminated. • Barcelona—Autoritat del Transport Metropolita (ATM): – The ATM is a regional consortium of 164 municipalities that provide transit serving the Region of Catalonia sur- rounding Barcelona and is responsible for coordinating operating and financial plans for the region. In the inner A P P E N D I X D International Experiences with Local and Regional Public Transportation Funding 80Antos, J., Financial Devolution in Transport: How Do Others Do It, and Does It Work?, Case Studies from Western Europe and North America, draft paper, Massachusetts Institute of Technology, Cambridge, Massachusetts, Undated.

63 suburbs, a similar entity, Entitat Metropolitana del Trans- port (EMT) owns and runs bus and rail service; and – Regional revenues come mostly from a value-added tax, or VAT, and personal income tax; local subsidies (sources not specified) account for 38 percent of rev- enues in the region and the proportion has been increas- ing in recent years. • Madrid—Consorcio Regional de Transportes de Madrid (CRTM): – CRTM is a voluntary consortium of 174 regional munic- ipalities responsible for coordinating operating and finan- cial plans for the region; it also owns the region’s major bus and rail providers as separate entities; – Local and regional nonfare revenues account for 50 per- cent of all revenues and are provided by the Region of Madrid (71 percent), the City Council of Madrid (17 per- cent), and from allocations of national personal income, VAT and business taxes; and – Local sources include unspecified personal income taxes, sales-type taxes, motor vehicle fees, and property taxes. • Rome—Agenzia per la Mobilità de Comune di Roma (ATAC): – ATAC contracts for all surface services and will soon contract for subsurface services as well; – ATAC’s revenues come from fares (28 percent), unspec- ified subsidies from the City of Rome (61 percent) and other nonfare revenues, including advertising (10 per- cent). A large share of the funding from Rome comes from “regional transfers” within the Region of Lazio and from City local real estate (property) taxes; and – ATAC also has authority to impose parking fees and congestion pricing. • Toronto—Greater Toronto Transit Authority (GTTA): – Since the elimination in the mid to late 1990s of provin- cial subsidies for transit, transit in the Toronto area has relied primarily on local property taxes; – However, since 2004, interest in transit has grown sub- stantially at the provincial, and even federal level (this for the first time); – For example, in 2004, a Can$1 billion joint federal/ provincial Canada Strategic Infrastructure Fund (CSIF) was enacted to support specific capital projects over 5 years with contributions split in thirds among the fed- eral, provincial, and city governments; – Also in 2004, a portion of the provincial gas tax, Can1.5 cent per liter, was earmarked for transit; and – A new agency, entitled the Greater Toronto Trans- portation Authority (GTTA) also was created by the province in 2006 to coordinate planning and possibly funding, in the Toronto-Hamilton region, beginning with the implementation of a unified smart card fare- card system. This organization is just in the process of creating its organizational structure. • Montreal—Agence Métropolitaine de Transport (ATM): – The ATM was established in 1995 by provincial legisla- tion with responsibility for planning, coordination, integration, and promotion of transit services, and effi- ciency on the region’s road network; – Local funding sources include a gas tax of Can1.5 cents per liter, a Can$30 annual automobile license fee, and revenues from municipalities’ purchase of commuter rail service; and – In addition, the province contributes the equivalent of 100 percent of the debt service on the commuter rail system. • Vancouver—Greater Vancouver Transportation Authority (GVTA/TransLink): – GVTA was created in 1998 with responsibility for inte- gration of the region’s road system, transit services, transportation demand management program (TDM), and air quality programs; – GVTA local and regional funding comes from a Can $11.5 cent per liter fuel tax, a dedicated property tax, a tax on hydro electricity, a sales tax on commercial park- ing, and tolls; and81 – GVTA has authority for a “commuter tax” as well, and has undertaken a public–private partnership agree- ment to support a new rapid transit line. • London—Transport for London (TfL): In 2003, London instituted a congestion charging scheme to control traffic demand in central London. The current charge is 8 pounds per vehicle per day and the scheme currently is raising 260 million pounds in revenues per year. These funds pri- marily have been to improve London bus services. 81 After being in force in 2006 and 2007, the British Columbia government rescinded the parking tax on business parking spaces due to persistent objections of the business community.