Updated November 27, 2011 at 7:00 am: The section describing the variations from budget for 2011 has been updated.
Updated November 25, 2011 at 1:05 pm: I have written an article for Torontoist on the pending service cuts.
Updated November 22, 2011 at 11:10 am: TTC staff propose that the 145 Humber Bay Express bus be discontinued after February 10, 2012. This route has never met the financial or performance criteria used to evaluate other services. After two years of a charmed life as a local Councillor’s pet project, the route is finally being held to the same standards as the rest of the transit system. When we are cutting services across Toronto, spending $150k/year to provide 70 people (140 trips) with their own bus service cannot be justified.
The original post follows below:
TTC ridership numbers for September 2011 are up 5.1% over 2010, a level 2.4% above the budget projection. Under normal circumstances, this would be cause for celebration, but not in Rob Ford’s Toronto. Here we cut service even when riding goes up, all in the name of wrestling with a fictitiously inflated City deficit.
The Chief General Manager’s Report tells us that riding will come in just a hair under half a billion at 497m for the year 2011, fully 10m more than the budget estimate. Those riders generate more revenue for the TTC, but don’t expect to see this in service improvements.
Back in early 2011, TTC Chair Karen Stintz told riders who would be affected by this year’s service cuts that they were “for the greater good”, and offsetting improvements would come in the fall. Come they did, although about one quarter of the fall improvements fall victim to the 2012 budget cuts. The full list of 2012 cuts is far longer than the surviving 2011 additions.
This table lists all of the improvements made from September through November (most in September) 2011. Headways are shown for spring and fall 2011, as well as for January 2012. The changes in vehicle counts show the fall adds and, where applicable, the 2012 cuts.
The extra fare revenue will be largely consumed not by service, but by other costs related to staff downsizing and other one-time effects. It all nets out to under $4m in “surplus”, or as the City prefers to think of it, a reduced subsidy.
Revenue Changes from Budget: Fares $14.7m Advertising ( 2.8) Other Income 1.3 Expense Changes from Budget: Corporate Restructuring: $10.0m Build Toronto Transfer 7.2 Depreciation ( 6.9) Accident Claims 5.0 Workforce Gapping ( 5.6)
Some of these amounts are one-time costs (restructuring, the accounting effect of a property transfer, the effect of a change in capital spending and accounting). By including them in the total expenses for 2011, the TTC looks less “flush” than it might be otherwise.
Updated November 27, 2011:
A more detailed list of variations from budget appears in Appendix A of the CGM’s report linked above. In this list, expenses are organized by department rather than by function. Savings that cross departments (such as gapping) are spread through many lines.
The Build Toronto transfer listed above (and in the body of the report) is not an “expense” in the accounting sense and it does not appear in the Income/Expense statement. This is a transfer of equity from the TTC to Build Toronto, and it will eventually show up as an adjustment to Retained Earnings on the Financial Statement. If it had been treated as an expense, then the TTC would have been reimbursed (through the subsidy and/or fares) for the surplus property at York Mills and Yonge. This land was originally purchased as part of the North Yonge subway project and would have been paid for with City or Provincial capital subsidy.
The important distinction, one the TTC does not make in its report, lies in the difference between one-time costs and the ongoing expenses of running the system.
[End of update]
For 2012, the TTC will achieve savings in operating costs through service cuts, and their budget includes a 10¢ adult fare increase (if this is not implemented, further service cuts will be necessary to pay for another year of frozen fares). Whether ridership will grow, plateau at its current level or fall thanks to the changes in loading standards and the resulting cuts remains to be seen.
What is quite certain is that the “saving” through revised loading standards cannot be repeated in 2013 because there is a point at which there is no more room on the vehicles. This is a one-time saving, and both the TTC and the City must address funding and service provision in a mature way rather than blathering on about “respect for taxpayers”. The equal if not more important “respect for riders” is lost in the bombast.
Meanwhile, in a longer report that I will address in a separate article, we have Accenture Consulting’s review of TTC operations with recommendations for possible savings. Buried within this are statements about the level of subsidy of routes, and these depend on the same bankrupt methodology for allocating costs and revenues to individual routes we have seen from the TTC in years past.
The analysis is faulty because it is impossible to allocate fare revenue in a consistent manner in a flat fare, free transfer system. Cost allocations are subject to distortions introduced by variations in route characteristics. For example, a fast route costs less per kilometre to operate than a slow one because operators are paid by the hour, not by the distance driven. Long routes tend to have longer trips, and passengers consume more resources getting from one point to another even though they pay a fixed fare. Some passengers transfer multiple times, some not at all.
In a political atmosphere where service matters more than accounting, the gaping holes in the TTC’s analysis are ignored. However, when the bean counters get control, they love to measure things whether their scales are accurate or not. Once again we risk having service policy dictated by deeply flawed financial analysis and by the idea that we can calculate the actual subsidy each rider receives. What this misses is that riders are collections of trips. Some of these trips are expensive to serve, some are quite cheap. If we drive away usage for the expensive ones, we risk losing the cheap ones too.