Recent press coverage of the opening salvos in Toronto’s 2013 budget process tell us that the Budget Chief, Mike Del Grande, is trying for another year in which he, the Mayor and the City Manager dictate a zero percent increase in city funding to all agencies.  This is not playing well with some members of Council according to The Star, and with some luck this will extend to boards of agencies like the TTC.

The dynamics of Council have changed since the 2012 budget launch a year ago when the Mayor and City Manager issued a zero-percent edict and drove through cuts to many city services while claiming a massive, if fictional, deficit threatened the city’s integrity.  Trying for a repeat performance may play well as part of the already-in-progress 2014 election campaign, but such an attempt runs counter to the will of many on Council.  This is a delicate time for management at the City and its agencies like the TTC, and the leadership for a different world view must come from Council and the agency Boards.

This will not be as easy as holding a press conference to announce a $30-billion plan for a fairytale network of rapid transit lines that would be paid for through as-yet unknown future taxes and contributions from other governments.  This is the real world where the City and its agencies must raise real money from existing revenue streams today, must make decisions that will affect real service levels today, must be prepared to fight for policies that will deliver results today, not decades in the future.

The Operating Budget in Brief

The Operating Budget covers the day-to-day cost of running and maintaining the transit system.  Major repairs, new vehicles and infrastructure come out of the Capital Budget (about which more later).  Generally speaking, expenses and funding cannot be moved between the two budgets.

2012 Budget (Revised)        Operating     Wheel-Trans
                               ($m)          ($m)
Farebox & Other Revenues      1,069.9           5.3
Expenses                      1,444.0         100.2
Subsidy                         374.1          94.9

2012 Projected

Farebox & Other Revenues      1,076.6           5.3
Expenses                      1,447.4         101.4
Subsidy Required                370.8          96.1
Subsidy Available               374.1          94.9
"Surplus"                         3.3        (  1.2)

Source: CEO's Report for April 2012 (Published June 2012)

The projected figures are always different from the budget for various reasons.  The most common is that expenses never work out exactly as expected due to actual conditions including unexpected changes in major cost centres such as fuel and vehicle repairs.  Some details are in the CEO’s report (see compendium of links at the end of the article).  Revenue is affected by ridership, but can also be hurt or helped by fluctuations in advertising and rent revenues.  While these are small numbers in the larger budget scheme, all of the political debates about transit funding revolve around such small amounts and discuss service cuts or adds in millions of dollars.  A bad year for ad revenue coupled with a Council unwilling to backstop the loss with subsidies translates to worse service for riders.

The 2012 budgets were amended twice.  In June 2012, Council approved increasing the regular expense budget by $2.1m to provide additional service beginning this fall with funding to come from increased revenues.  Earlier, when the Commission was still dominated by Ford-friendly appointees, an attempt by Council to fund $5m in added service was thwarted by the Commission who diverted the funding to Wheel-Trans.

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