After a long, rambling, and less-then-well-informed debate, the TTC Board has approved increases in selected fares for 2016 at its meeting of November 23, 2015.

• Adult cash fares will rise from $3.00 to $3.25.
• Adult tokens will rise from $2.80 to $2.90.
• Metropass prices (all classes) will not change.
• Student and senior fares will not change pending the outcome of a study on Fare Equity that will report early in 2016.

The cash fare last changed in 2010, while the adult token fare, then $2.50, will have gone up $0.40 by 2016.

Freezing the Metropass prices will have the effect of lowering the “trip multiple”, the ratio of the pass price to the token fare from 50.5 in 2015 to 48.8. For monthly discount plan (MDP) subscribers, the ratio will fall to 44.7. The multiple is even lower for those who can claim the transit tax credit pulling it down to 38 for MDP users. This is only available to people with taxable income against which the transit credit can be applied.

This will make the pass more attractive to riders who now feel that it is priced beyond their normal transit usage level, and of course will provide a fare freeze for all existing pass users.

The gap between the adult and senior multiple will now be wider because seniors’ fares have not changed leaving the ratio between passes, tickets and cash fares as they were in 2015.

The unfocused debate can be blamed directly on the TTC’s own Budget Committee and its failure to actually discuss fare policy beyond producing a range of options for consideration by the full Board. Absent a clear idea from Mayor Tory or the City’s own budget process of subsidy that the TTC might receive in 2016, debates about “fares” turn into efforts to minimize the subsidy call against the City where “fighting taxes” takes priority.

When the issue reached the full Board, any idea that the TTC could magically survive without more subsidy had evaporated, but we still don’t know what will actually happen to fares or service if Council fails to deal with the TTC’s shortfall.

By the end of the meeting, there were several overlapping motions on the table, the product of many Board members each cooking up their own version of an appropriate new structure and policy framework.

• By Vince Crisanti: That student and senior fares be frozen pending the outcome of the Fare Equity report in 2016. Carried.
• By John Campbell: That a revised fare structure (see below) be implemented including a $0.20 jump in the adult token fare. Defeated 10:1 against.
• By Shelley Carroll as amended by Glenn De Baeremaeker: That staff report back on a common fare multiple for adult, senior and student passes. Carried.
• By Alan Heisey: That TTC and City Transportation Services work together on improvements to enhance transit service especially for special events such as subway shutdowns, and report to the Board in six months. Carried.
• By Joe Mihevc: That all seven options for service enhancements be approved. Defeated 8:3 against.
• By Joe Mihevc: That the three options not approved by the TTC Budget Committee (Subway service reliability, three minute service on Line 1 YUS, Cherry Streetcar) be referred to the City Budget Committee for consideration. Carried.
• By Josh Colle: That the TTC and Toronto Parking Authority study means by which parking revenue can be maximized with a report to the Board in 3Q16. Carried.
• By Josh Colle: That the TTC examine ways to increase non-fare revenue and reduce office space costs through consolidation, and that staff report by 2Q16 on annual and long term revenue targets. Carried.
• By Ron Lalonde as amended above: That the TTC adopt fare scenario 7 with no Metropass, student or senior fare increase ($0.25 more on adult cash fares, $0.10 more on adult token fares). Carried.

The combined effect of these decisions leaves the TTC with a $41-million gap between its proposed budget and the 2015 subsidy level. Considering that they are not even sure of getting that much when the first cut of the City’s 2016 budget is launched on December 15, 2015, this leaves Council facing an 8.7% increase in the main TTC operating subsidy request and a similar increase (although a smaller dollar amount) for Wheel-Trans.

When the final text of these motions is published by the TTC, I will update this article.

Getting to this point took quite a while. I will not attempt to reproduce the debate, and those with hours to spare can watch it on YouTube. Here is a sampling of the issues raised.

Commissioner John Campbell questioned the target of 555-million riders for 2016 in the context of falling ridership shown in the CEO’s Report. Ridership on a month-by-month basis is down slightly from 2014 and has been showing this pattern since June. Annual numbers are still above the previous year, but only because relatively stronger months in the winter and spring (compared to early 2014) buoy up the totals.

The CEO’s report (see p. 6) puts this down to bad winter weather and the fare increase in March, plus the fact that service improvements budgeted for 2015 have only just started to appear. Falling short on the budgeted increase is one thing, but falling in absolute terms is more troubling, and this pattern, if indeed the trend continues, is a troubling commentary on the TTC’s popularity. Customer satisfaction ratings and other quality measures may be going up, but bums-in-seats is the bottom line number driving fare revenue and political credibility.

Vice-Chair Alan Heisey asked why for subway shuttle operations parking restrictions were not implemented to speed service. CEO Andy Byford replied that shuttle operations are being reviewed on two counts. One change would be to operate “local” and “express” shuttles with some buses making the trip over the closed section end-to-end for riders destined beyond the gap in subway service. Another, under study with City Transportation Services, will look at parking controls where shuttles are operating.

Commissioner Shelley Carroll, referring to reliability indices for the subway lines and the good performance of Line 4 Sheppard asked about the effect of outdoor operation on the reliability of other lines. Andy Byford noted that Sheppard has many advantages including its relatively new infrastructure and its much lower demand level that avoids delays associated with crowded trains and platforms.

The issue of fare collection costs bounced around the table without much clarity from the Board or Management. Overall, the implementation of Presto is supposed to reduce fare handling costs from about 7% of revenue to 5.5%, a contracted fee that will be paid to Presto for their service. However, the cost of administering fare types varies with high cost for cash, token and ticket handling, and relatively low cost for passes (one transaction a month) and especially for bulk sales and subscriptions where no cash handling is required. When this revenue stream moves over to Presto, they will receive a fee even for the “pass type” of bulk fare purchase, and this will account for a larger proportion of fares paid as the loading of fares onto Presto cards replaces ticket and token purchases for more riders. At the same time, a move to fare capping (as done today by GO Transit which limits the price charged based on usage) could encourage more “pass user” behaviour from riders who, today, do not want to invest in a Metropass up front.

Shelley Carroll asked that the subsidy requirement for changing the senior/student pass fare multiple to match adult passes be costed out. The actual mechanism – moving the senior/student multiple down to the adult level, or converging all passes to a common multiple somewhere in between – was deliberately left as an option for analysis. The gap between the two price multiples will widen in 2016 because the adult token fare is going up while the adult pass price is frozen.

Carroll also proposed that a targeted subsidy for specific groups such as seniors could be a way to entice Queen’s Park into increasing its TTC funding. This approach is superficially attractive, but it could result in lower fares for some riders without any increase in revenue to the TTC. This would address only the equity question, not the problem of service quantity and quality.

One public deputant, Sean Meagher from Social Planning Toronto, pressed the Board on the need to be advocates for better transit, and to urge City Council to find additional revenue including tools that were granted in the City of Toronto Act. Glenn De Baeremaeker replied that Council had rejected the use of these tools, but this missed two obvious issues. First, that rejection was during the Ford era and today’s Council is not bound by the decision. Second, there is a credibility problem when asking Queen’s Park for higher subsidies if revenue streams available to the City such as a vehicle registration tax or a tax on parking lots sit unused for lack of political willpower.

Alan Heisey advanced a thesis that Metropasses are used by the well off, cash fares by the poor and tokens/tickets by everyone else in the middle. Meagher replied that the breakdown is not that simple, and there is a full spectrum of fare media usage by various groups. Unfortunately, the breakdown provided by the TTC’s customer survey is not finely-grained enough to distinguish between those of modest incomes (under $45k/year) and the very poor.

Heisey’s argument was clearly headed to a conclusion that pass buyers could tolerate a larger increase, and this echoes a common theme heard at the TTC that too many pass users are getting “free rides”. One obvious issue Heisey missed is that passes will tend to be purchased by people with a regular-enough travel requirement that they save money, but also with enough of a regular cash float that they can afford to pre-pay their transit costs in a monthly lump sum. People who travel less frequently or whose budget is a day-to-day juggling act will not be buying passes. This does not mean that all passholders are affluent.

John Campbell asked for a clarification between the cost increase ascribed to increased demand (10m more rides at a cost of $9m, or $0.90/ride, point 3 on p. 13), the generic formula that 10m more rides has a marginal cost of $11m ($1.10/ride, p. 23), and the actual average cost/rider on the system of over $2. Staff replied that the $11m figure is for a generic set of changes, and the specifics of the 2016 budget (time of day, affected mode) differed from this average.

Campbell asked whether there will be a 2015 “surplus” (i.e. a requirement for a lower subsidy that the City budgeted). Staff replied that they expect the system to be very close to “break even” based on experience to date. It is worth noting that although revenues and riding are below projections, the TTC has constrained growth of expenses in various ways to the point that a $5m capital-from-current payment for new buses originally planned for 2016 has been moved into 2015.

On the question of service to Cherry Street, staff replied that they are looking at a spring or fall 2016 implementation, depending on some changes to traffic signals pending from the City. If the extra money in the budget “option” is not approved by the Board or Council, the money for this route will be found by reallocation from other lines. One way or another, the service will be operated.

As I discussed in a separate article, the TTC has just launched consultation of options for a new route structure in the eastern waterfront. Had this information been before the Board, there would have been a better context for the debate, notably the fact that most of the service changes are not on Cherry Street itself, but on other routes, notably King where the “Cherry” cars would supplement the existing 504 service.

Commissioner Rick Byers asked whether it makes sense to have a “VIP” Metropass plan with lower costs to organizations making bulk purchases, typically companies offering passes to their employees. The buyers would typically be in a higher income bracket, a comment that continued Heisey’s premise that Metropass users can afford a fare increase. Staff pointed out that the VIP discount is roughly the same as the Monthly Discount Program. About 600k passes are sold this way annually, and it would be possible to change the VIP discount. Whether this would simply result in buyers switching to the MDP program would depend on the level of subsidy their employers offer as part of the VIP package.

Commissioner Maureen Adamson, herself a former Vice-Chair, asked why there were so many new employees. Staff explained that with more vehicles on the streets and more supervision to improve service quality, more staff were needed. (The full explanation for the staffing changes is on p. 26 of the report.) This is a basic of transit operations, especially when the TTC made several Council-approved service increases in 2015 whose full effect is not felt until the 2016 budget.

Chair Josh Colle asked about “cracking the nut” of service on King and Queen Streets, a problem he hears of daily. Staff replied that further priority measures might help, but there is a problem with a shortage of streetcars. The extra cost of running buses on King runs at about $2.9m/year and this will continue for the foreseeable future. New streetcars, when they arrive, will allow for capacity increases on these routes. Colle asked what the extra money under the “Streetcar reliability” option was. Staff replied that improvements to the 501 Queen route, scheduled to begin in January 2016, were not in the base budget. If they are not funded, money will have to be “reallocated” from elsewhere. The 501 plan involves a complete schedule rewrite to match actual conditions on the street and, additional, “run as directed” buses will be scheduled to deal with emergencies and gaps.

Commissioner Joe Mihevc, arguing that the TTC has no idea yet of what the City subsidy level will be based on statements from the Mayor or the Budget Committee, nor any news of possible subsidies from Queen’s Park, moved that consideration of the budget be deferred. He further moved that all seven service improvement options be included in the budget, but if that position failed, that they at least be sent to Budget Committee for consideration.

John Campbell argued that the cost per new rider is much lower for some improvements than for others, and that enhancements should be reviewed on a cost/benefit basis. However, the decision to implement some of the changes was taken in the 2015 budget cycle as part of the Mayor’s transit initiative, and we have passed the point of comparative evaluation for them. A big problem with that outlook is that “cost/benefit” means different things depending on your goal.

Looking only at the cost of gaining new riders completely ignores the benefit of improved service for existing riders and the general improvement in system attractiveness. For example, opening the subway earlier on Sundays may have a cost that will not be offset by increased fare revenue, but it will make travelling much easier for those who now face unreliable and crowded conditions on the Yonge and Bloor-Danforth night buses.

Alan Heisey wants to see a ranked list of changes, but this can be difficult without a clear understanding of what is “important” for that ranking. The Board’s failure to articulate such a policy directly results in unranked proposals.

Shelley Carroll noted that even though she is a member of the City Budget Committee, she has not seen any updates on the development of the 2016 budget contrary to her previous experience. There is no sense of how tight the budget might be, and of how the TTC’s subsidy request might fit into it.

Glenn De Baeremaeker asked how the Board can ask for funding of service improvements without also making a recommendation on fares. Joe Mihevc replied that he would happily support the option of a $0.25 bump in the cash fare, $0.10 on tokens, and a Metropass freeze.

Chair Colle noted that a deferral would mean that the TTC would lose three months’ revenue waiting for final budget approval by Council, and wondered why the TTC Board even exists if not to make decisions. He argued than annual fare increases are the best approach, but that line of debate was not pursued further.

Because Mihevc’s deferral motion would make any other action on the budget moot, it was voted on at this point, but lost by a 10:1 margin.

John Campbell proposed his own scheme for fare increases:

• Metropasses would rise from $141.50 to $144.00 (1.8%)
• Cash fares would rise from $3.00 to $3.25 (8.3%)
• Token fares would rise from $2.80 to $3.00 (7.1%)
• Senior/student cash fares would be unchanged at $2.00
• Senior/student passes would ruse from $112.00 to $114.00 (1.8%)
• The proposal was silent on senior/student tickets currently priced at $1.95

Campbell argued that his scheme would produce $46m additional fare revenue – $10m from passes, $6m from higher cash fares and $30m from tokens. This caused a flurry of activity as staff tried to estimate the effect of the proposal which Campbell himself had worked out by analogy to the known costs and effects of various fare scenarios in the staff report. It was an odd proposal on two counts:

• Campbell in the past has been an advocate of higher-priced passes arguing that the TTC is giving away ride. His proposal would have lowered the Metropass multiple from 50.5 to 48, directly contrary to his position that the pass is underpriced.
• If the senior/student ticket went up proportionately to tokens, this would make them more expensive than the cash fare. Campbell was not open to an amendment to his proposal to explicitly freeze all senior/student fares, and this wound up being a separate proposal.

Rick Byers argued that the TTC should get rid of the Metropass VIP plan, but did not present this as a motion as he appeared to have little support for the idea.

Glenn De Baeremaeker felt that Metropass users should be encouraged, that increased transit usage was for the greater good, and thinks that riders would accept a $3.50 cash fare as an offset for cheaper passes. He also argued that the City needs to contribute a higher subsidy.

Chair Colle noted that if parking rates were doubled, the TTC would gain $9m in new revenue ($11m gross including current net revenue) at little net cost assuming parking utilization did not change.

The outcome of this debate is summarized in the motions above.

Further reading on background to this decision:

TTC 2016 Operating Budget

TTC Budget Committee Meeting November 9, 2015

TTC Budget 2016: Confused Priorities Make For a Confusing Budget (Part II)

TTC Budget 2016: Confused Priorities Make For a Confusing Budget (Part I)