TTC’s Operating Budget results for the first eight months of 2009 were published in the Chief General Manager’s Report on the Commission Agenda for the meeting of October 29.
Although riding is up 1.9% over 2008, the budgetted expectation was 2.5% and, therefore, the TTC faces a shortfall in farebox revenue. The drop came mainly in July and August which were affected by the civic workers’ strike and other employment losses. Although September is beyond the scope of the report, preliminary data shows that ridership is climbing back up to the projected level, and full-year ridership is now projected at 471-million (compared to the budget figure of 473-million).
The average fare is expected to come in at $1.78, two cents below the budgetted value of $1.80, because Metropass and other concession fare use is above budget. The combined effect of the lower average fare and ridership is $15.7-million less farebox revenue for 2009 that expected. To put this in perspective, that is on a base of about $900-million in budgetted fares, or less than 2%.
Expenses for 2009 are expected to be almost on target due to a mix of overruns and savings that are roughly in balance. These arise mainly from unexpected factors such as the severe winter and lower than projected utility costs.
Overall, the TTC projects a deficit $22-million higher than its original budget.
In response, they plan to defer some service improvements originally planned for the fall, a cutback on overtime and a review of operator hiring and training. Requirements for new operators are affected by service plans, and any change in new service rollouts means that hiring plans must be adjusted to match. The cutback on overtime may show up as spotty service through the fall and early winter as runs normally crewed by overtime may not be filled.
The effect of employment on riding levels is not uniform across the system, and it has hurt demand on suburban routes more than on lines downtown. Many of the February cutbacks that were implemented due to a shortage of buses and operators have been restored in previous months, but some of them are now permanent as riding has fallen on affected lines below the level where Service Standards would trigger improvements.
In public statements over the past weeks, TTC Chair Giambrone has cited a shortfall of $80-million going into the 2010 budget process. A related issue is the cut, if any, that might occur in municipal subsidy. All City departments recently were directed to make permanent cuts to their budgets, net of any revenue, of 5% for 2010. In the case of the TTC, it is unclear as I write this exactly what the impact will be as some of the municipal subsidy is backfilled from a provincial contribution. If there is to be a 5% cut, what number should this apply to? Will operating subsidies from Queen’s Park remain at 2009 levels going into 2010?
The total subsidy for 2009 was about $400-million, of which 5% would be $20-million. Added to the TTC’s $80-million projection, this could bring the gap in TTC funding for 2010 to $100-million. Options available to address this include:
- Deferral of some service increases. The “20-minute network”, which has an annual cost of over $20-million, has been pushed back to 2011 or beyond. Given that it would have been in place for only part of 2010, the saving on the coming budget will be less than $10-million. As I write this, the “10-minute network” is still in the plans for late 2010 as its cost is comparatively small.
- Fare increase. With riding at 471-million and the average fare at $1.78, the total fare revenue in 2009 will be $838-million. Making up $100-million on fares looks like a 12% problem, but in fact a higher increase would be needed as a fare jump that big would trigger riding losses.
Some have advocated raising the Metropass fare multiple, but this would be counterproductive as it would penalize the heaviest users of the system and reduce the attractiveness of the “all you can eat” nature of the pass. The compound effect of rebalancing the pass relative to token fares and a large increase would likely see pass prices go up at least 20%. This would have the ironic effect of raising the federal subsidy to pass holders via the tax system, but none of this money would come to the TTC.
The TTC learned from its experience in the mid 1990’s that wholesale service cuts are not the answer as riders value qualityof service the highest in their transit system. They will absorb modest fare increases as part of the normal cost of living provided service is maintained, even better if it is improved. Fare freezes may be politically attractive, but they undermine the very transit system they purport to serve by limiting quality to that affordable within subsidies. Transit’s reputation, rarely outstanding in good times, falls and with it the political support for transit spending.
At the provincial level, GO Transit has been asked to cut its subsidy requirements even while adding service to the schedules. This shows the prevailing thinking at Queen’s Park and suggests that Toronto will be lucky to get even the 2009 level of transit funding it received from the province. Any cut to that revenue adds to the budget pressure on the City and the TTC.
This will not be an easy year for the Operating Budget debates.