TTC 2009 Operating Budget

This week, the TTC presented a 2009 Operating Budget in a style departing from past practice.  Instead of weeping and wailing about how they would love to run better service, but can’t afford it, the TTC now has a budget posture of “this is what we plan to run, now let’s find the money to do it”.

This is the sort of advocacy long missing from a “transit” agency.

The starting point for the budget assumes:

  • Costs will rise due to inflationary and contract pressures, as well as operation of more service.
  • Revenues will rise due to increased riding (with no allowance for a fare increase).
  • The City of Toronto subsidy will remain unchanged (this is actually a decline taking inflation into account)
  • The outstanding difference is to be funded through whatever revenue streams become available including a carry-over of any surplus from 2008 (at last report, a deficit, not a surplus was forecast).

Riding at current levels was last seen almost two decades ago in 1990, just before a recession triggered job losses, funding and service cutbacks.  During the dark years, service improvements were hard to achieve because almost no changes could meet the high average cost recovery of the existing system.  Policy shifts in this decade have moved the TTC to actively seek new riders even if this means that average will fall from its high of 85% back to a range in line with historic practice of the 80s and before.

Parts of the cost base rose faster than inflation and this ate up some of the headroom that might otherwise have been available for service.  However, these increases were mostly absorbed by the system without service cuts to preserve the momentum of ridership growth.

Ridership in 2009 is expected to be up to 480-million, or 3.4% above the 2008 budget and probable yearend.  But for the walkout earlier this year, 2008 riding would have been above the budget.  The year-to-year comparison is complicated by the fact that 2008 included a weekend-long strike, while 2009 is not a leap year and therefore has one less day’s worth of riding. 

Service hours will increase in 2009 by 9% both through planned improvements in 2009 and the full year impact of changes implemented part way through 2008.  These changes include operation of all routes on the same hours as the subway system (some of these have been implemented, but most will come later in 2008), and reduction of the maximum headway to 20 minutes (targetted for late 2009).  Another 2008 change carried forward is the reduction in maximum average load standards triggering better service on crowded routes.  (Service kilometres go up by only 6% indicating that added hours go disproportionately to heavy, slower routes.)

The budget shortfall of $87-million must be addressed somehow, but to put this in perspective, the report shows the requirements out to 2013 with a subsidy shortfall rising to $322-million.  This does not include allowances for the net additional cost of new rapid transit operations whatever flavour they may take, nor does it provide for any fare increases.  The TTC will now prepare a multi-year plan for ridership, service, fares and the financial strategy(ies) that will be needed to sustain the system’s operation.  Such a plan is definitely needed in the context of regional fare and service integration.

The possibility remains that our economic situation will lead to yet another one-year fix with a bit more money from various governments and a fare increase.  If this happens and the service initiatives stay in place, that will be a good first step.  If better service falls victim to budget cuts, then all the fine political words about reducing congestion and environmental impacts by making transit more attractive will be so much hot air. 

The real test of governments is not how much they spend when times are good, but how well they support key services when times are bad.  The TTC set the bar high by saying “this is what we should be doing”.  Now let’s see who is going to pay for it.

6 thoughts on “TTC 2009 Operating Budget

  1. Looking at the report, a few things are of interest. Things that people have commented here may be addressed:

    “….the implementation of service reliability measures on 501 Queen ($5 million).” (under Service Adjustments on pg. 12) Hmm, from the last “fix the 501 forum”, I’m not sure what exactly the $5 million is for. It can’t cost $1 million per year to have an inspector sitting in a truck at Long Branch loop….can it?

    And on pg. 13:

    “11. System Cleanliness/Appearance: $2 million. A continuation of the program introduced in 2008 to improve maintenance and cleanliness of the subway stations will include, for 2009, various wall tile, terrazzo floor, and ceiling work. In addition, a scratchitti abatement program on all rail vehicles will commence. Specifically, all internal glass on these vehicles will be covered with a scratch-resistant film which can be replaced more quickly and at a cheaper cost compared to glass.”

    Unlike the 501 improvement bill, this seems way too little to me for their professed aims. Although I am pleased they are funding attempts to clean up the system.

    Steve: Yes, I agree that the alleged cost of making the Queen car run properly is preposterous. It certainly could not be scaled up to the system as a whole. We still have not seen concrete proposals for route restructuring, nor do we have any idea when or if the TTC will improve service. The ratio of supervision seems to be an excessive response, and the TTC needs to determine what is actually needed.


  2. Proforma budget numbers look very scary. The system essentially broke.

    Cost per ride increase year over year:

    2009 0.00% $2.68
    2010 6.29% $2.74
    2011 5.48% $2.82
    2012 5.75% $2.92
    2013 6.09% $3.04

    Revenue per ride stays the same year over year:
    2009 to 2013 – $1.90 revenue per ride

    Expected riders per year:

    2009 480000000
    2010 499000000 3.96%
    2011 511000000 2.40%
    2012 523000000 2.35%
    2013 533000000 1.91%

    Question: Why is it that the cost per ride goes up by 5% to 6% per year, while the number of rides is on average going up by 2.66% per year?

    GO Transit has the same problem (see Hansard record for this question by Ted Chudleigh to the Minister of Transportation).

    This has to stop!!!! The TTC cannot support more riders without increase the revenue per ride. As it stands, they are relying on other levels of government to bail them out, and even more so in the future. I feel bad for the people of Toronto because this means their property tax will go up. If operating subsidies come from the provincial government, then I think the province should stop as they are handing over funds from other taxpayers to fund TTC’s fiscal mismanagement.

    Steve: As I mentioned in my post, the revenue per passenger is held constant only for the purpose of showing how costs would go up. I agree that a useful table would have shown a modest fare increase, say 3% annually, and its effect. However, the experience with any proposal about fares is that just publishing a pro-forma table ignites a storm of debate and, oddly enough, establishes a floor under future debates. It’s easy to do the math — a compounded 3% increase over 5 years gets about 16% more revenue less whatever is lost to resistance to higher fares (this should be negligible if service quality is preserved or improved).

    Over five years, this would add roughly $160-million to annual fare revenues (16% over a base of $1-billion) and would reduce the subsidy shortfall in 2013 from $322-million to $162-million.

    The cost per rider climbs faster than riding itself due to changes in service quality. For the next few years, the system is implementing better standards for service, and the TTC is still absorbing the effects of the lower capacity of the new bus fleet. Some operating costs such as diesel fuel rise faster than inflation, and operating practices intended to improve service (such as changes in the assignment of drivers to vehicles on busy routes) raise the cost of doing business.

    Probably the most telling point is the TTC’s ongoing tendency to low-ball riding growth. In the past, this has interfered with plans for more service because the projected revenue effectively determined the cost side of the budget. This year we have a change with a budget that is service driven on the premise that more is needed and we must find a way to pay for it.


  3. The idea that “other” taxpayers are subsidising Toronto needs to be nipped in the bud. The fact is that the Toronto taxpayer is helping to fund the rest of Ontario – through general income tax revenues and also because of the continuing unfair Education Tax which is a holdover from the Harris (We hate Toronto) years.

    We have already seen the City cave in on the Property Transfer and Car license taxes while BILLIONS (with a B) continue to be transferred from Toronto to services for other taxpayers. I am not opposed to paying taxes or even to a Property Tax increase on my home. However, the unfair Education Tax needs to be reformed and the Provincial government needs to acknowledge the taxes it raises in this City.

    I am not suggesting that the Province needs to spend all the revenue raised in Toronto in this City – it is fair that the wealth generated in this City (often as a result of contributions from the hinterland) be shared for the good of us all. However, the “all” includes the citizens of Toronto and their needs.


  4. Ah, but Michael, more money for Toronto means 905 pissed at the Liberals, which means, no majority government the next time around.

    Until everybody against Toronto isn’t a sure fire political winner, welcome to much of the same at budget time every year.

    For as incompetent as I think Messrs. Miller and Giambrone are, they will be perpetually handicapped by what Mr. Harris did, and what Mr. McGuinty hasn’t done.

    Thank God for those 19 Liberal MPP fighting for Toronto!


  5. Steve, I was at the Greyhound station the other day and heard a rumour from a security guard that Greyhound is planning on giving up the land for the Bay St and Elizabeth St terminals, which they currently lease from the TTC, and moving to lands that the “government” has procured for them on the waterfront. Do you know anything about this? I know this post was about the TTC operating budget, but does the TTC capital budget show any potential revenue from the sale of that site?

    Steve: There is a project in the Metrolinx regional plan to relocate the bus terminal to the vicinity of Union Station. This is not as simple as it seems as there are constraints on available land, and roads in that district can be badly congested.

    There is a large accumulated deficit from the bus terminal that threatened in recent years to eclipse the sale value of the land. I believe that this situation has been rectified, but the net profit to the TTC would be small because the bus terminal lost money for years on the TTC’s dime.


  6. Michael,

    How do you think 905’ers feel. They pay more income tax than 416’ers(higher average wages + plus more residents). Plus they get far less in provincial transfers, $2,000 per household less. Perhaps Torontonians should question how a city that spends over $8,000 per year per household can survive collecting only $2,200 in property tax on average. In Mississauga/Peel the per household municipal spending is $3,800 while the the average tax is $2,900. So the average household in Mississauga pays more than $500 per year in property tax than the average household in Toronto and gets $ 4,573.71 less in services. The voodoo that allowed this to happen, taxing businesses to death provincial transfers and emptying of the reserves have all been maxed out. Reality is going to bite hard in Toronto. Just wait to see what surprises the new assessments bring with large growth in the residential class and stagnation in the non residential class combined and a fixed ratio.


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