Cancelled increase to gas tax share main reason for funding shortfall: LTC

The City of London is being asked to fork over extra cash for the London Transit Commission (LTC) after a projected funding shortfall due in large part to the provincial government’s decision to cancel an increase to municipalities’ share of gas tax funding.

The LTC has tabled a budget that would see a roughly 20 per cent increase to the city’s share of its operating costs.

According to the LTC’s 2020-2023 Operating Budget Summary, the total expenditure for 2019 is projected to be just over $83-million with revenue (including fares and provincial funding) accounting for roughly $50.7-million. The city is expected to contribute $32.3-million.

For 2020, the LTC is projecting a total expenditure of roughly $88.2-million. Revenue in 2020 is estimated to fall to just over $49.2-million, thanks in part to provincial funding dropping from roughly $14.7-million in 2019 to just over $9.2-million in 2020. The LTC is hoping the city will approve a new budget that would see it contribute a projected $38.9-million in 2020.

“The real issue that we’re facing is the cancellation by the provincial government of the doubling of the provincial gas tax,” said LTC GM Kelly Paleczny.

“Over the last multi-year budget period we were relying on the fact that that gas tax was going to double and we would have access to additional gas tax to offset operating costs.”

As a result, the commission approved a budget that would see the city increase its contribution to the LTC in order to address the shortfall. The LTC says the increase in city funding “can be split between a base budget increase … and assessment growth.”

A base budget increase would have a direct impact “on the overall tax rate increase required by the City of London” while an assessment growth portion does not directly impact the tax rate increase as it would be funded by revenues the city collects from growth. The LTC says its administration is in discussion with the city on how to mitigate the potential impact on the tax rate.

The requested increase in city funding would not cover the entire funding shortfall and as a result the LTC’s proposed budget also includes a 15 per cent increase in all fares, which would mark the first time fares have increased in London since 2008.

If the city does not approve the budget, Paleczny said the only other option would be service cuts.

“92 per cent of our budget is service, directly,” she explained.

“There really is no way to avoid service reductions if the city doesn’t approve the budget that we’ve put forward.”

The municipal budget, which would include the LTC’s budget, is expected to be tabled with council in December.