Update 2, 4:45 pm September 23: The Chief General Manager’s Report for the period to the start of August 2009 is now online. In this, we learn:
- The change in average fare revenue is 2.32, not 3, cents per rider due both to higher pass sales and greater use of concession fares (children, students, seniors) (page 3).
- Revenue loss due to ridership being below budget accounts for $3.4-million, while the lower average fare cointributes $7.6-million. (Both of these are only for the seven months to the end of July.)
- Yearend revenue shortfall from fares will lie between $15- and $19-million depending on ridership results through the fall.
- Yearend revenue from advertising and other income (mainly interest) will be $3.6-million below budget.
- Expenses are expected to be over budget due to the combined effect of:
- Inglis building flood remediation ($1.4-million)
- Higher service requirement from city construction ($2-million)
- Higher overtime due to staff shortage (gapping), maintenance backlog and severe winter weather ($3.5-million)
- Vehicle maintenance needs ($4-million)
- Other changes ($0.3-million)
- Savings on expenses include:
- Lower energy rates and water consumption ($4.9-million)
- Employee cost reductions ($2-million)
- Planned service reductions ($1.9-million). It is unclear whether these are reductions still to come, or if this is the saving versus budget of cuts imposed by availability problems with the bus fleet.
- The following actions will be taken to address the anticipated $17.4-million shortfall:
- Some service improvements planned for fall 2009 will be deferred until mid-2010 (no list is given).
- Overtime will be curtailed. The effect on service availability is not addressed, but we do know that there were problems with fielding all service late in 2008 due to similar actions.
- There will be a comprehensive review of hiring and training for operators. This is intended to address a surge in retirements caused by demographics of the operator workforce.
- All discretionary expenses in departments will be reviewed.
- Page 6 mentions “the SRT Conversion and Expansion project”. Although this is not explicitly mentioned in the Capital Budget report, we are about to see the TTC announce the conversion of the SRT to LRT technology. This has long been rumoured, and finally has shown up in print.
Update 1, 12:35 pm September 23: As I write this, Councillor and TTC Vice-Chair Mihevc is on CP24 talking about those too-cheap Metropasses. Wake up Joe: You’re being fed a load of baloney by your own staff to soften things up for a disproportionate fare increase. They pulled the same stunt in 2007/2008.
I wonder how much has been spent subdising riders on St. Clair with the special timed-transfer arrangement that was instituted as an offset to the construction impact, and how much all that extra bus service cost thanks to the cock-ups in construction planning and co-ordination?
If Toronto must debate a fare increase, then let’s look at everything in the TTC’s budget and fare structure, not just TTC staff’s perennial whipping boy, the Metropass.
Original post follows:
Today’s Toronto Star reports that the TTC faces a $17-million shortfall in revenue thanks to increasing use of Metropasses. More riders than predicted use passes, and this reduces the average fare per rider.
No big surprise: people are using the TTC more, and as rides per month go up, the Metropass becomes more attractive. Surprise! The TTC underestimated this effect, and once again we hear about “losing money” on pass riders.
We “lose money” on every rider including those who use tokens instead of cash, who ride at reduced rates for children, students and seniors. We “lose money” on riders who travel for a single fare across the breadth of the city.
This sort of spin comes out regularly in TTC financial reports, and the anti-Metropass bias has been clear for years. Never mind that we get more people on the system, that we make it more attractive for regular users, that this addresses a larger goal of City planning.
Hoping to find more background on this article, I turned to the Budget Committee agenda for a recent meeting. A long report deals with variations in the Operating Budgets for the City and its agencies.
- Page 23: The shortfall in revenue due to higher than budgeted use of passes and concession fares is $5.7-million to June 30. The TTC report (see below) from which this is taken projects $9-million to year-end.
- Page 23: The shortfall in advertising revenue is $2.3-million for the year.
- Page 38 (Appendix E): Total expenditures are projected at $3.5-million over budget (see below).
- Page 40 (Appendix F): Total revenues are projected at $12.7-million under budget.
Despite the effect of the municipal strike, TTC expects its 2009 ridership to hit the budget target of 473-million (page 8). The Star article reports that the average fare per rider is three cents lower than expected, but this works out to $14-million.
Sales of Metropasses were expected to fall once they could no longer be used to access TTC parking lots, but this didn’t happen.
Ridership was slightly above budget in April primarily due to higher than forecast Metropass sales. The higher than expected sales were driven by two factors. A small decline in Metropass sales had been forecast to accompany the elimination of free parking at commuter parking lots. Sales did not decline, rather than leaving the TTC, patrons found a different way of getting to the stations whether that was walking, taking the bus or getting dropped off. The other reason is the impact the threat of a strike in April 2008 had on sales last year. Although a small amount was included in the 2009 budget estimate to take this into account, it appears that the effect was under-estimated and there was a strong recapture of pass riders in April 2009. Ridership was essentially on budget during May. [Chief General Manager’s Report from the August 26, 2009 Commission Meeting, page 2]
From this report, we also learn that parking revenue is expected to fall $0.4-million under budget and “other income” (mainly interest) will be $1.0-million short.
The expenditure overrun is the combined effect of several factors.
Year-end expenses are currently projected to be 0.3% ($3.5 million) over budget largely due to unbudgeted emergency flood and mould remediation and restoration work required in the Inglis Building ($1.4M); the requirement for more service resulting from City construction activities ($2M); additional overtime requirements due to higher than anticipated gapping, service maintenance backlog and operating in severe winter conditions ($3.1M); vehicle maintenance needs ($4M); and other changes ($1.5M). These increases have been significantly offset by lower hydro and natural gas rates and reduced water consumption ($4.7M); other employee cost reductions primarily due to improved attendance and safety performance resulting from various initiatives currently underway ($2M); and planned service reductions ($1.8M). [CGM report linked above, page 4]
All in all, the TTC will be about $17-million off on a budget of $1.3-billion, about 1.3%. No agency, certainly not the City, is able to exactly match budget numbers, and the City report shows large variations in many agencies.
The TTC spins its budget problem as the fault of Metropass sales, but this is only one part of many complex revenue and expense factors. The TTC must stop blaming its most loyal customers for its financial difficulties.