Financing Regional Public Transit in Ontario: The Case for Strengthening the Wicksellian Connection

Abstract

Infrastructure finance has been much discussed recently. We first present a brief argument about the importance of establishing what we call the Wicksellian Connection – a clear and meaningful linkage between expenditures and revenues – essentially because unless it is decided who is going to pay for infrastructure and how, we cannot sensibly decide what should be done. In the next section we then review the major proposals that have been put forward on financing rapid transit in the Toronto region, and find that little attention has been paid to establishing a sufficiently clear linkage between what is to be done and how it is to be paid to ensure that what is finally done is financed in a way that will meet even the barest tests of efficiency, equity, and accountability. Finally, a brief conclusion considers some ways in which this circle may be closed and at least a partial Wicksellian Connection established.

Keywords: infrastructure finance, urban transit, linking expenditures and revenues

JEL Classification: H76, R48