Updated November 30, 2012 at 5:00 pm:
These are different in format from the TTC versions in that they are cast in a standard reporting layout for City budgets and concentrate on the financing of the TTC from the City’s point of view. All expenditures have a “gross” and “net” version with the difference made up by various revenues such as fares and subsidies from other governments. That difference represents what the City must raise from its own resources (although some of this actually originates externally).
The net expenditure for 2013 is $411m for conventional operations and $97m for Wheel-Trans. Starting at page 11 of the report is a detailed listing of the savings expected from various sources including wages, benefits and energy costs.
A saving of about $1.9m (on a base of about $39m) is listed for traction power costs reduced from the preliminary 2013 budget because of “variances from service planning”. The TTC has clarified that power savings don’t arise from service cuts, but from improved efficiency of the TR trains. Additional savings come in facility heating based on actual experience, although that is in another budget line.
The City continues to seek a multi-year plan from the TTC that will take into account rising demand, inflation, potential cost savings, customer service and performance measures. Such a plan would be very sensitive not only to future economic conditions, but also to the policy framework for transit service and what is considered “good quality” that the City should be providing. What remains to be seen is whether the TTC will deliver a broad view including options and costs for enhancing the transit system, or a bare bones, do only what’s needed forecast.
The 2014-15 Outlook on page 15 is in more detail than any public reports from the TTC itself. Both years include provision for additional revenue from ridership growth and from a ten-cent fare increase in each year. The service budget is projected to rise by 3.2% in 2014 and 2.0% in 2015, while energy costs are projected at about 4% in each year.
What is noteworthy is that the increase in energy costs is greater than the cost of additional service. Out of the total projected system cost increases, actual service improvements count for less than 20%. The rest goes to pay the cost of doing business with the existing service. This relationship works in reverse too, and shows how only very substantial service cuts can offset the annual inflationary effects. Savings may be available in parts of the organization, but some can only be achieved once (e.g. contracting out) not over and over in future years.
Opening the Leslie Barn will add $10m annually when it is fully operational in late 2014. This is a one time increase associated with any new major facility. In years beyond this projection lie the effects of opening the Spadina Subway extension and the LRT lines.
Improved cleaning of subway stations will cost $1.7m starting in 2013. This is the net cost of contracting out for a higher frequency of cleans (every 90 minutes weekdays, every 5 hours weekends).
Debit and credit card capabilities will be expanded to most collector booths in the system, and this will increase service fees by $3.9m in 2013 with a further $1m in 2014. The City has asked the TTC to quantify any savings from reduced cash handling as part of the 2014 budget. This begs an intriguing question about the cost-benefit analysis on Presto: have some of the savings from moving away from cash been counted twice?
A new “Chief of Staff” position will be created in 2013. This was originally proposed in 2012, but deferred. Its role will be
“to take a lead role in the transformation of the TTC’s reputation among stakeholders, media and peers. The position will also undertake program coordination for major schemes for the TTC.”
There will also be a new “Customer Development Department”:
TTC requires an increase of 6 positions effective January 1, 2013 to establish a new Customer Development Department.
The positions include 1 Head of Customer Development, 3 Senior Planners, 1 Customer Development Analyst and 1 Fare Policy Analyst.
The Customer Development Department of the Strategy and Customer Experience group will be a small department entirely focused on identifying, developing and delivering new and innovative ways of delivering improvements for TTC customers. They will focus on improving the value of money of the TTC proposition and ensure that the quality of the time customers spend with TTC meets the highest standards of transit operators around the world.
It is fascinating that these functions are not included within an existing department structure. Whether the positions will be filled with existing TTC staff or from outside the organization remains to be seen. The goals sound good, but the new department must be able to influence the organization as a whole to change both the quality of service it delivers and the standards for acceptability.
A section on provincial funding notes that there was no specific operating budget funding for the years 2010-12. Instead, part of the gas tax revenue intended to support the capital budget was diverted to operating accounts (about $90m annually). The City and TTC will continue to pursue a return to 50% funding of the operating deficit, although this may be a lost cause with the state of provincial deficits.
The Analyst Notes for the capital budget focus on the problem of financing the TTC’s need mainly for “State of Good Repair” (SOGR) projects which include fleet plans. The concurrent projects to replace subway cars, streetcars and a large number of buses has placed a strain on TTC financing generally especially considering that a good chunk of these costs are born by the City of Toronto. The City would like to see a TTC fleet plan that looks beyond the 10-year budget horizon and addresses the need to spread out capital requirements.
I have written about fleet planning before and won’t belabour the matter here. However, current plans do not address many issues including:
- Realistic estimates of subway capacity including constraints at terminals and other locations that interfere with achieving claimed future headway reductions.
- A discussion of the option for “high rate” operation to provide the same headways with fewer trains.
- Fleet and service growth in all modes to handle ridership. This is especially critical for rail vehicles that tend to be acquired infrequently, but it also affects bus planning because of the need for garage space.
- The implications of a return to “Ridership Growth Strategy” loading standards and any initiatives to improve the overall quality of service provided to riders.
As I reported previously, the decision to defer 10 additional TR sets beyond the 2022 budget horizon allows a delay in providing capacity to handle these trains. If this proves impractical, then the costs will move back into the current planning window. TTC ridership projections indicate that they will be needed beginning in 2018. Related issues include those of station capacity (more and larger trains arriving more frequently will add to demand within the stations), and the debate on whether platform doors are a pre-requisite to this level of operation.
The bus overhaul program’s budget has increased by $120m (39.6%) because of additional requirements for the hybrid bus fleet and the original Orions.
Bus purchases were also stripped out of previous budgets, and they have been restored. This, in turn, triggers the need for the McNicoll Bus Garage to handle an additional 250 buses by 2018.
The new LRV budget has been increased to restore the 15 cars cut from the budget in 2012 as these will be required for future service improvements.
The Budget Analyst notes that unlike the City’s departments, the TTC does not have a formal SOGR backlog report showing the work required, but as yet unfunded in the capital program. Some of this does show up in the unfunded projects list, but there is no real sense of the amount of “nice to have” work that is put on hold, eventually becoming “must have” as a call on future budgets.
The TTC’s list of unfunded projects comes to just over $5-billion, but the lion’s share of this is the North Yonge Subway Extension which may very well not wind up as a TTC project. The TTC needs to segregate “unfunded” work depending on whether it supports the existing system and is likely to require substantial City funding, or if it is related to growth and will likely have a large commitment of funding from Queen’s Park or Ottawa. Moreover, the TTC has blind spots about projects such as the Waterfront (someone else’s funding problem) and the DRL (until recently, not a project they cared to address). The “unfunded” list reflects the skewed priorities of TTC management and it should be updated to reflect a broader view of transit needs and funding pressures.
I leave it to my readers to dig through the Analyst Notes in detail. There is a wealth of information beyond that provided in public reports from the TTC itself.
The Transportation Services Capital Budget is mainly concerned with the road system, but it contains a few items of transit interest.
The single biggest one is the proposed reconstruction of the Gardiner Expressway, a $626m project that will stretch out to 2024 [see pages 23-24 in the analyst notes]. This work will no doubt have quite an effect on adjacent city streets and greater congestion on the surface network close to the Gardiner will become a fact of life for the next decade.
Also included is a St. Clair / Metrolinx grade separation project at a total cost of $32m with the main work in 2016-18. This would address the narrow roadway between Keele and Old Weston Road.
Updated November 21, 2012 at 5:00 pm:
The TTC confirmed that adult token fares will go up by five cents to $2.65 in 2013 with increases in most other rates on a proportionate basis. Cash fare remains at $3.00. The new rates are listed on page 6 of the budget report and in the press release.
Various reports were requested by the Commission:
- The cost of extending the family pass to 7-day use.
- The cost of providing free off-peak service to seniors, or of a reduced price off-peak senior’s Metropass.
- The implications of reduced fares for recipients of ODSP (Ontario Disability Support Program) and Ontario Works.
See the main article below for detailed updates on the Operating Budget.
Original post from November 20, 2012:
At its meeting on November 21, the TTC will discuss revised operating and capital budgets for 2013 including a proposed five-cent increase in token fares to $2.65. The budget report reveals that funding concerns have eased somewhat from the original proposal in September.
In the preliminary budget, there was a $10-million gap between projected funding, including subsidy, and the system’s operating cost. This gap has been closed thanks to revised projections for certain revenues and costs.
- The average fare paid by riders through 2012 has been running slightly above expectations, and this generates an additional $2m in the 2013 projections.
- An additional $1m in “other revenue” (advertising, rents, etc.) is expected.
- Non-salary employee costs have been dropped by $2m to reflect actual usage of health care benefits.
- Gapping — the period when a budgeted position is unfilled — is expected to be greater than the original budget’s provision giving a $3m saving.
- Operator turnover has been greater than expected, and the proportion of junior operators (who are paid less than senior operators) is higher than planned. This will save $2m in labour costs.
The evolution of TTC operating subsidies over recent years shows that Toronto has not yet returned to the 2009 level. The gap is even larger when inflation is taken into account.
TTC Operating Subsidies ------ Operating ----- Wheel-Trans ($million) Toronto Ontario Total Toronto 2009 $350.7 $ 91.6 $442.3 $ 77.0 2010 306.8 91.6 398.4 84.2 2011 342.0 91.6 433.6 89.8 2012 (original) 282.5 91.6 374.1 96.8 2012 (revised) 319.4 91.6 411.0 96.8 2013 budget 319.4 91.6 411.0 96.8
The revised 2012 subsidy arises from funding of the arbitrated wage settlement. The City of Toronto absorbed this additional cost. (Figures for 2009-11 are taken from the TTC’s audited financial statements.)
The TTC’s total expenses in 2013 will be $68m more than in 2012 (revised) made up of the following changes:
- $24m from the Collective Bargaining Agreement
- $20m for additional service to carry the projected 528m riders in 2013
- $11m for other employee costs (mainly benefits)
- $4m for increased use of debit and credit cards by passengers
- $4m for increased overtime
- $3m for inflationary increases in non-labour costs
- $3m for increased depreciation (this is charged on capital assets for which the TTC receives less than 100% subsidy)
- $3m for increased facility maintenance
- $2m for improved washroom cleaning
- $6m saving for reduced accident claims settlements (mainly due to legislative changes in no-fault rules)
- $2m saving in reduced cost of natural gas
- $1m saving in contracting out of bus servicing
This will be funded from:
- $39m of increased revenue from higher ridership relative to the 2012 budget
- $18m of increased revenue from the fare increase
- $10m as described above
- $1m in other revenue (this appears to have been counted twice, once as part of the $10m and again as an independent item)
(End of update)
Strong ridership plus fare increases provide the funding for recent service improvements, but the TTC remains vulnerable to unexpected jumps in future costs such as diesel fuel. Operating savings were achieved through service cuts. Recent service improvements only keep pace with demand, but at the new lower standards imposed in 2012. Any further cuts would run counter to the newly liberal view of transit service on Council, and retrenchment of the TTC as a budgetary saving would be counter-productive.
The frozen contribution of gas tax revenue belies Ontario’s frequent claims of strong support for transit. Capital, yes, for specific projects and mainly in the later parts of the decade, but repeated announcements of that $8-billion worth of LRT projects ring hollow when Queen’s Park contributes only 6 percent of the TTC operating budget.
A matter for future debate and a new administration at City Hall will be the questions of which cuts should be undone and how much money should be devoted to increasing latent capacity on the transit system. Service quality is always a victim of budget pressures even when debates rage about billions of dollars in mythical rapid transit plans.
In the preliminary version of the 10-year capital budget, there was a $688m shortfall in available funding versus the planned projects to 2022. This has been addressed by three changes:
- $74m has been deferred beyond the 2022 horizon (Wheel-Trans bus purchases in 2020-22 and T1/TR yard accommodations). Plans to buy additional trains to improve service on the Yonge-University-Spadina line (beyond those needed for the extension to Vaughan) have been put off beyond the 10-year planning window, and this is now reflected by delaying the yard changes needed to store them.
- Development Charges will produce an additional $79m beyond original projections.
- Asset sales by the City will produce an additional $534m.
While this clears away an annoying gap in TTC capital planning, it does nothing to address the list of projects that are not even in the budget including major items such as the Downtown Relief Line or the Richmond Hill extension. These represent a considerable future cost for the City and its “partners” at Queen’s Park and Ottawa. Although we hear a lot about future revenues and the Metrolinx Investment Strategy, those two subway projects would soak up a large chunk of any new taxes, and it would be hard to justify spending so much of new “regional” revenue on downtown-oriented subway spending.