TTC Riding Up, But Not Quite Enough

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.

12 thoughts on “TTC Riding Up, But Not Quite Enough

  1. I smell a cut in funding to Transit City projects….

    Steve: Actually that’s the Capital Budget, and in the out years, not 2010. However, thanks to inflation and change in scope (things like extending the Eglinton line to the airport, putting more of it underground, etc), the overall rollout will certainly take longer than planned.


  2. Given (big) service cuts are out of the question, and massaging the fare structure through increaseing the Metropass multiple is unfavorable, then the only remaining option is a uniform fare increase.


  3. As always, the operating budget gets squeezed while massive amounts of money are wasted on the capital budget.

    How about trimming a few hundred million from the overbuilt stations on the Spadina subway extension by cutting back on the cathedral-like stations, giant bus terminals, public art, green roofs, etc.?

    Steve: Alas, money from the capital budget cannot be used on the operating side. In any event, those would be one-time savings while operating expenses are ongoing. The real issue for the Spadina Line will be it anticipated deficit (new revenue less operating costs) of around $14-million annally once it opens.


  4. As part of mitigating blood-letting cuts to every department (TTC included), the City and its ABCs should follow the TTC’s lead and end free parking everywhere they can.

    Ending free parking in park, arena and library lots and charging for side street parking in popular areas like Greektown (exempting residential permit holders) would raise much needed money. A comparative drop in the bucket, I know, but the 10M + that’s raiseable would still help a bit.

    Over at the TTC I don’t see too many easy cuts, you would know better than most of us Steve where they may be the odd pocket of money to be found.

    I’d certainly rather see a modestly higher fare, and new revenue tools and/or limited and prudent cuts elsewhere in the City budget, as opposed to putting transit or any other vital service though bloodletting service cuts (or monstrous fee/fare hikes)


  5. I just hope we don’t get the smelly mess of a downtown vs. suburb fight over transit fares. The metropass is a subsidy that allows the suburban poor to come downtown and clean the messes of the downtown condo owners and 905’ers who party down there, and the downtown poor to come up the suburbs and work in the stores the suburban home owners shop at. The fare box is a defacto tax on apartment dwellers.

    If this gets into a discussion of zones, the whole city is going to lose, economically and socially. We can’t afford that in this city right now.

    Is anybody talking about a increase to token or ticket prices?

    I get there has to be an increase each year to keep things going; but not many of us are getting increases in pay at all.

    It’s going to be a scary time for anybody receiving government support this year.

    On another note, with the province looking for 5% cuts in all departments but health and education, any current transit subsidies may be on the block as well.

    Steve: Your social analysis is way off base. Many people who make quite comfortable incomes use the Metropass for peak direction commuting supplemented by other travel. It’s a question of the convenience of the transit system, not a subsidy for menial workers. As for apartment dwellers (I am one), we are already overtaxed relative to homeowners because our “residence” is considered to be a business and is taxed accordingly. That tax revenue goes to pay for lots of things other than transit subsidies including handouts to the business sector who always complain that they are so hard done by.

    Of course if you don’t use transit enough to justify buying a pass, then maybe you’re not the right person to be analyzing this issue.


  6. When times are bad, we cut.
    When times are good, we cut.
    Now that times are bad again? we cut.

    Will transit EVER be properly funded in this city?

    More than that, we stopped building highways in the 70’s, saying we want people to take transit. Populations have boomed since then, but where is this transit people are supposed to take?


  7. Steve Said: In any event, those would be one-time savings while operating expenses are ongoing.

    Except that when you build big one-off structures that have wierd designs, you end up having to spend lots more maintaining/fixing them … both because the structure does not work as expected (see the leaking wood at the AGO), or because the materials are expensive (see First Canadian Place’s marble), or you end up making “special” buildings that become historic sites and can’t be torn down or modified without jumping through hoops (see Union Station’s trainshed roof).

    Even seemingly simple stations end up costing lots of money, see Dupont’s roof.

    Rather than making every station an entirely new design, we should standardize on a style that is easy/cheap to maintain, and cheap to build … GO seems to have this down, as all their stations are similar, other than Union, most are fairly simple designs with little flair … while still continuing to look good.

    Steve: That was the approach on the original Yonge and Bloor-Danforth subways, and current plans are a reaction against that. I agree that some of the new designs look good, but will cost more than they should to build and maintain. Having said that, the original comment suggested diverting capital funds to operating, and by itself, that’s a one-time fix. Issues of design and ongoing maintenance/operating costs are another level of analysis.


  8. “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.”

    Except that it does, because if the tax credit didn’t exist the Metropass wouldn’t be worth buying. 40 tokens/month is $84. Even with occasional extra riding (or as it’s called at the Commission “free riding”) I don’t use 8-10 extra rides without fail especially in months like December or February or when I take a vacation.

    That means that TTC doesn’t get $16 (I’m on MDP) extra from the subsidy but it sure as hell doesn’t get zero. That’s $100 paid upfront with no cash handling by TTC workers, minus the cost of handling the pass/debit and posting it.


  9. This goes down to one bottom line. As a home owner my taxes keep going up and up, meanwhile services keep getting cut and slashed like a horror flick, that’s the climate we have here in Toronto, or for that matter Canada. Case in point the people who put christmas lights under the Gardiner as public art. I remember reading somewhere it was $115,000 for that, paid for by what my whole neighborhood shells out in property taxes this year. That $115,000 could be better spent on I don’t know, an extra bus somewhere on the operating budget. I am all for art, and nice things that makes the city fun, but if there is going to be a fight over funding for transit, pothole repairs, debt payments, water mains and the like. I think a serious rethink is in order.


  10. Hmm … I can see where you misconstrued my points as indicating only the working poor use a transit pass. In discussions of transit fares, the working poor are often left out of the equation. Unfortunately, many people don’t recognise the amount of work done by the working poor in this city. If I get a little uptight about mentionning those issues, it’s because I work with people who do exactly what I described – apartment dwellers who live in one area and work in another serving the people who live in homes/condos. It’s those people I fear will be hit by a fare increase and suffer the most.

    I’m a community worker working with some of the 13 neighbourhoods that are underserviced, an apartment dweller, a transit user with the discount pass, as are all members of my family, and I don’t have a car. I’d rather not get into a peeing match about who knows what community better and who has how big a carbon footprint with anybody and that wasn’t my point.

    In the neighbourhoods I work in, the transit pass is a necessity for people to get around. People who work 3 jobs and 60 hour a week to get by use the pass 4-5 times a day 6-7 days a week. Any raise in the pass amount will hit those people very hard, and proportionally harder in comparison to the income of others who use the pass. Any talk of zone based fares brings up the same issues.

    Are there more affluent others, like myself relatively, using the pass? Of course. But, the social discohesion on the working poor caused by transit fare increases cannot be ignored.

    That’s what I fear, and what gets lost in any discussion of downtown vs. suburb discussions over pass increases and zone fares.

    Steve: I agree with your position, now that it’s clear what you are arguing. If there is a fare increase, passes should not go up disproportionately to tokens on the bogus excuse that too many people are using passes. The “problem”, such as it is, is that TTC staff goofed in estimating the use of passes and now try to paper this over by arguing that the pass is underpriced. I have several very unkind, uncomplimentary words for people who use this type of ass-covering “logic”.

    Similarly, zone fares sound good until one realizes that they penalize the long haul riders the most. Not only are these the folks who by necessity live in the suburbs and have long commutes, but also the very people we are trying to get out of their cars. As I have written before, if the TTC fare revenue were pro-rated based on distance travelled, the fare to Richmond Hill would be higher than what GO charges.

    No doubt, if we gave a discount, relatively speaking, for long haul trips, we would soon hear how there were too many people taking advantage of this fare and we needed to encourage (and bilk) more short haul riders.

    As a general observation about the way you state your case, as someone who is recently retired from a well-paid job, but doesn’t drive and knows the limitations of public transit, I find that class-based arguments alienate readers because they are too simplistic, and they exclude the very people whose political support is necessary. This may sound a bit like “noblesse oblige”, but it’s reality. The blue Tories, the people who feel that the poor deserve their lot, will never be won over; it’s the red Tories, the ones who actually have a social conscience who make the difference, even if they are in hiding thanks to the hijacking of what used to be the “Progressive” Conservative party.


  11. I’m curious about the discounts that are given to bulk purchases of Metropasses by large businesses in Toronto (96$, instead of the 100$ for MDP, 108$ for to buy at station). I’ve always wondered why as a well-payed bank employee I can get my Metropass for less money (and straight to my desk, no lines!) when hard working social workers, church employees, small businesses and the unemployed can’t. To me this seems like 1) an injustice and the opposite of what should be happening on public transit and 2) a way to increase fare revenue. I should be paying extra for the delivery of the metropass to my desk.

    Steve: That decision is not the TTC’s but your employers’. If the bank chooses to bulk buy passes for its staff, that’s their decision. Banks have more money than churches.


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