The TTC staff report recommending a fare increase is now available on the TTC’s website. This will be formally considered at the Commission meeting on November 17, but of course this subject has already been discussed at length in the media and on blogs.
The new price for adult tokens will be $2.50, up 25 cents, with all other fares increased roughly pro-rata. The one exception is the Metropass for which the proposed fare multiple (the ratio between the pass price and the token price) would be bumped by the equivalent of two fares. This places the burden of the fare increase disproportionately on the Metropass users.
The TTC projects essentially flat ridership and service for 2010 relative to 2009. Projected riding is 473-million, up only 2-million over the likely 2009 level. Other than the full-year effect of service changes added during 2009, no major service improvements are planned for 2010.
A particularly striking comment in the report is that TTC costs are expected to rise next year by 7% and to continue rising at that rate for the foreseeable future. A number of factors are cited, but they don’t all make sense over an extended period.
- Labour costs. The TTC is committed to wage increases at the currently contracted levels, but unless there is a major change in economic circumstances, the next round of bargaining will almost certainly result in a lower rate of increase.
- Energy costs. It is unclear whether all of the TTC’s energy costs (diesel fuel, electric power) will rise at greater than the rate of inflation and if so, by how much.
- General inflation. Since labour and energy are already out of the mix, this only affects costs such as materials.
- Annualized service increases. This affects only 2009.
- Low floor bus adjustments. By the end of 2009, high-floor buses are planned to be less than 10% of the bus fleet, and by 2013, last of them will be retired. The capacity adjustment for changing to low-floor buses will be completely worked into the system substantially in 2010 when 58 of the remaining 100 “New Look”s are retired.
- Construction and congestion adjustments. Some additional construction effects can be expected as programs such as watermain replacement ramp up, but this will hit a new plateau at some point.
- Increased vehicle and facility maintenance requirements. I can understand better facility maintenance (although stations are covered in a separate bullet), but if anything the vehicle maintenance costs should start to drop with the implementation of large new fleets of vehicles in all modes.
If we are looking at a sustained 7% growth in the TTC’s operating budget, even without service improvements, the underlying reasons must be clearly understood. This has very serious implications for transit funding, service and fares in the coming decade.
The TTC projects that, relative to the 2009 budget and without a fare increase, revenue would be $13-million lower and expenses $93-million higher for a combined shortfall of $106-million. This does not take into account the City’s request for a 5% cut in funding requirements. The details of this are not included in the online report.
Revenue will be lower than the 2009 budget because more riders are using concession fares of some form: passes, students, seniors, children. The budgeted ridership for 2010 will be the same as in 2009, but the TTC expects to get less revenue than they had budgeted for in 2009 because the average fare is falling.
With the gradual shift of riders to some form of pass, not to mention a future migration to smart cards and whatever schemes they might bring for fare incentives, revenue forecasts will become more complex. The term “average fare” may cease to be meaningful depending on what that fare can buy (time based usage, integration with other transit operations).
Metropass holders now account for 46% of all TTC riding and 41% of the revenue. TTC staff claim that this disparity bears examination because pass users may be getting too much of an advantage. This is a faulty analysis. Indeed, if the use of passes (or an equivalent pricing scheme through smart cards) grows, the vast majority of revenue will come from pass holders. As a group, pass-based trips will always generate less revenue per trip, just as token-based trips generate less revenue than cash fares.
The average pass generates 70 trips per month, of which 3 are by someone other than the holder of the pass. This makes the average fare per trip quite low, this must be take in context. Some of those extra trips simply wouldn’t occur if they could not be made at zero marginal cost. Some of those trips would not necessarily generate extra fares as riders would organize their travel to minimize fare payments and use their transfers. Many of those extra trips, being on transit, bring savings to the pass holder and to the City because they avoid the need for an extra auto with its associated costs. Unfortunately, those savings do not show up in the TTC’s budget.
The TTC argues that the Metropass fare multiple, now sitting at 48.4 (before the effects of either the discount available to monthly subscribers or the tax rebate) should be raised to 50.4. This would add $5 (two fares at the new rate) to the price a pass would have at the current multiple. Little riding would be lost to the TTC because pass holders already get a good deal on fares, and there is no incentive for them to switch back to tokens or change their riding habits. Only the marginal users, who are right on the borderline of breaking even with passes, would drop back.
This would have an odd statistical effect. Those riders would use far fewer fares than the 70/month assumed for a passholder and so “ridership” for this group would go down quite drastically (from 70 to something under 40). However, the remaining hard-core pass users would continue to ride at historical rates, and the rides/pass value would go up. No doubt, this could be used in future years to show how pass holders are even more out of whack with “average” riders. However, the “average” rider is becoming a pass holder, and it’s time the TTC stopped looking at them as the coddled exception.
If the Metropass is held at a 48.4 multiple and all fares rise based on a $2.50 token rate, the TTC projects it would lose 11.5-million rides. Most of these would be from the higher-priced media used by casual riders who are more sensitive to fare increases. The net revenue gain would be $50.4-million. For each +1 in the Metropass multiple, the TTC would get roughly $6-million more revenue while losing about .5-million rides. The proposed change in the Metropass multiple is worth about $12-million to the TTC. Whether it is justified in the sense of “fairness” is quite another matter.
The staff report talks about ways in which current costs can be trimmed (one example is the switch from biodiesel to regular fuel, a change already approved by the Commission). However, we don’t know which potential savings have already been worked into the proposed budget and which remain as areas for additional improvement.
The budget as described in this report does not meet the targets the TTC itself describes — a need to find over $100-million annually plus whatever cutback will occur in revenue from the City, Province or other sources such as parking and advertising. We will hear, no doubt, how the sky will fall if the money is not found somewhere so that service and quality can be maintained, but this has not been quantified.
I don’t want to see the TTC slip back into just “making do” with inadquate year-to-year funding as that leads not only to poor service and unacceptable maintenance issues as we learned all too well in the Russell Hill subway accident.
Next week, we will see the usual melee of speakers at the TTC meeting all pleading their variations on how fares should be structured. Many of the issues they will raise cannot even be settled by the TTC itself either because the decisions belong elsewhere, or because the TTC cannot force other governments to give it money.
The TTC, the City and Queen’s Park need to map out a service, fare and funding strategy on at least a five-year basis just as they would with other parts of the budget. If a new philosophy of transit financing comes along, plug it into that model, see what happens, and agree that this new direction will be implemented. These discussions should happen regularly as we consider the increasing role transit is expected to play across the GTA.