In my previous article, I reviewed the TTC’s preliminary information regarding its Operating budget for 2011. Here I turn to the Capital Budget — the one that pays for major repairs, replacement vehicles and system expansion.
Following this budget from year to year can be challenging. For the better part of a decade it has been clear that there would be a funding crisis as project deferrals accumulated, and now the dam has finally burst and big-ticket schemes are underway. The early years of such projects tend to have low cash-flows because they are mainly design work and progress payments on smaller preparatory steps (such as the utility relocations and grade separation on the Sheppard East LRT). Now, as spending builds on Transit City, the Spadina Subway Extension, replacement subway trains and streetcars, the demand for capital will grow.
During the 2010 Budget Cycle, many projects were deferred beyond 2019 so that they would not appear on the City’s or TTC’s books. This made the depth of the budgetary hole appear more shallow than it really was. If that were not bad enough, the TTC has created a new group of projects aimed at Yonge Subway capacity problems and, in the process, is partly pre-judging the outcome of a Downtown Relief Line study. The combined result is that the funding shortfall shown as $1.344-billion in the 2010 budget papers for the years 2010-2019 has grown substantially, and there is now a funding shortfall of $2.8b for 2011-2020.
The staff budget report does not include a detailed breakdown of the projected funding sources. Much more information was presented in the September 2009 report in the previous budget cycle. (Note that the 2009 report does not exactly reflect the budget as it was eventually approved by Council.)
For the 2011-2020 budget planning, the TTC is taking the approach that it should show what spending is required, not just which projects fit within the available envelope. This puts both Council and various funding agencies on notice about the true scope of future needs. Council may not like the level of spending, but at least a debate is possible on the relative merit of transit programs.
In theory, this is a welcome change as it avoids the “surprise” factor when unplanned spending requests appear out of thin air. However, there will be some debate about how critical some “required” projects might be, and what additional projects are still hidden out of sight.
The TTC estimates that restoring previously omitted items as well as new additions will raise the capital requirement by $3-billion over the next ten years. That is a gross number, but the degree to which it will attract subsidies depends on the generosity and enlightenment of other governments.
The Capital Budget is divided into two parts. The “Base Capital Program” generally includes projects that do not have special, earmarked funding. This program accounted for roughly $1-billion per year in 2010-2012 in the fall 2009 estimates. In 2010, roughly half the funding came from the provincial and federal subsidy programs, but the proportion declines in future years as time-limited programs expire.
The “Non-Base Program” includes the Spadina Subway Extension, Transit City and Waterfront Toronto projects. Funding for these cannot be reallocated elsewhere in the TTC budget.
During the 2010 Capital Budget approval process, about $1b worth of projects was deferred to reduce the overall 10-year requirement and to stay within City debt targets. These included:
- Bus mid-life rebuilds
- Fire ventillation upgrades
- Easier Access program
- CIS (vehicle monitoring system) replacement
- Station modernization
- Industrial facility upgrades
For the 2011 budget cycle, TTC staff restored the following items (note that some are still missing):
- Bus rebuild program ($470m)
- Purchase of replacement buses ($55m)
- Industrial facility upgrades ($47m)
- Paving projects ($40m)
- Transit priorities ($38m)
- Fire ventillation ($33m)
The following projects have been added to address subway capacity issues:
- Subway rail yards enhancement and expansion ($472m)
- Storage tracks north of Finch Station ($350m)
- Bloor-Danforth automatic train control signalling ($320m)
- Platform edge doors on Yonge-University (south end only) ($180m)
- 10 additional subway trainsets for ridership growth ($163m)
- T1 subway car overhauls ($34m)
The following projects have been added for the streetcar system:
- Increased cost for Ashbridges Bay maintenance facility ($90m)
- Fare equipment for legacy LRVs ($88m)
- Carhouse modifications for new LRV fleet ($77m)
- Reconstruction of streetcar overhead ($36m)
The following project has been added for the bus system:
- Bus hoist replacements ($52m)
An intriguing problem lurking in the budget but not explicitly mention is the increased cost of rebuilding buses as their technology becomes more complex. For all that they’re “old technology”, the GM “New Looks” were built to last as shown by the fact that some remain in service on the TTC long after the model went out of production. Buses with complex propulsion systems, electronics and the extra complexity of hybrid power supplies may not fare as well.
Several proposed projects relate to increasing capacity on the Yonge-University line. An umbrella project, Rail Yard Accommodation, is prices at $738m of which $472 lies in the 10-year planning window of the Capital Budget. This scheme includes increasing the number of trains on the Yonge line to operate a closer headway, and in turn this will require a bigger fleet (10 more TR trainsets, $163m) and additional storage capacity somewhere north of Finch Station ($350m).
Closer headways require better reliability, and the TTC’s latest bugbear in subway operations is garbage causing “smoke at track level”. At the risk of sounding catty, this has become the subway equivalent of “traffic congestion”, a catch-all answer trotted out as often as possible.
Intriguingly, the presentation on platform doors (which I will address in a separate post) no longer speaks of them primarily as a means of reducing suicides, but as a way of improving service. However, only the Bloor to St. George Loop is planned over the next 10 years ($180m), and the full YUS will set us back $492m. Add in Automatic Train Control ($320m) and platform doors (not costed) for BD, and the TTC will have an array of technology that, one hopes, will reduce the incidence of random delay. We will, however, have to wait a very long time to see whether all of this expenditure will actually improve capacity, and what as-yet unbudgetted add-ons will be needed. “In for a penny, in for a pound”.
The TTC will also have to address factors such as delays from crew changes at terminals and along the line, train exchanges enroute to get crews back on time, and the fact that at very close headways, any excess running time approaching terminals will produce even longer queues than we see today.
Possibly a few pennies from the billions proposed for all this technology could turn to actually cleaning the system more regularly and preventing the buildup of materials that cause the “smoke” in the first place.
Notable by its absence is any mention of the Downtown Relief Line and its possible contribution to network capacity. There is a study underway (I will report on that in another article), but it is clear that TTC management are proceeding as if this line is not an option. We need to understand alternatives, their all-in costs and implementation timelines.
The Funding Shortfall
Based on current projections, the TTC foresees a shortfall in funding of $2.8-billion in the capital programs. This arises from many factors, notably the concentration of large-dollar funding on system expansion (subway and LRT lines) while maintenance, renovation and capacity expansion on the existing system are left behind.
[A]s there are insufficient funds to meet even the basic or state-of-good-repair needs of the TTC, staff will be reviewing all improvement and expansion category projects to determine whether they should be removed from the budget. However, even if all expansion and improvement projects were eliminated there would still be a significant shortfall …
This sentence goes on to talk about packaging all of the capacity improvements into one megaproject to be presented as a bundle to Queen’s Park and Ottawa for possible funding. This will produce a bulge in capital requirements that, in the main, is not part of current Metrolinx planning because this relates to “local” service. Sadly, that local service is the distribution mechanism for the Metrolinx/GO network. Any future “Investment Strategy” at Queen’s Park needs to include “local” requirements in the overall scheme whether this be rapid transit renovations in Toronto or improved frequency and hours of service for bus systems in the 905.
What is abundantly clear is that the paltry $150m per year Toronto receives in gas tax revenue from each of the senior governments is nowhere near enough to fund the system’s requirements. Those who argue that Queen’s Park should take over the TTC should remember that a takeover means responsibility for funding, something the Province has been less than willing to consider. It’s easier to leave Toronto and the TTC holding the bag, convenient whipping boys for lectures on overspending.
The New Reporting Relationship for the TTC to the City
After long battles with Council over budgetary control of the TTC, Council approved a new bylaw using its powers under the City of Toronto Act relating to all of its subsidiary agencies. The new arrangement requires that many budgetary changes previously made by the Commission come to Council for approval. The intent is to clamp down on runaway projects and ad hoc reallocation of funding between budget lines. Some leeway is required to handle changing requirements for service and to staff up for future projects, and the TTC is working with City management on how these issues will be handled in the new context. Obviously, the new Council and Mayor and their attitude, such as it might be, to the TTC, will influence this discussion.
The first meeting of the “new” Commission will take place in mid-December, and I expect that management will present an overview of the budget position, refined based on discussions with City staff and the prevailing political views of the new Council and Mayor. The formal budgets will be presented to the January 2011 meeting.
For related newspaper coverage, please see The Star.