TTC Capital Budget and Plan 2021

Updated December 22, 2020 at 1:20 pm: Some illustrations from the Board meeting presentation have been added to this article, or have replaced previous versions with lower resolution from the budget report. Text has been added in some sections notably in comments about the timing of future projects and spending.

This is a companion article to my piece on the Operating Budget for 2021. This year operations will have a big challenge because subsidies are needed to backfill lost fare revenue, and yet politically, spending money on what we already have does not have the allure of announcing yet another subway plan. “Look! Another bus on Dufferin” does not stir the blood in quite the same way although one might argue that the long-suffering riders there are equally “deserving” of attention.

The Capital Budget has its own problems. For many years the true need for transit capital in Toronto was hidden so that the depth of the funding hole would not be obvious. Magically, there always seem to be enough capital to cover current costs, and somehow future years took care of themselves as they became the new present.

That scheme came unglued as TTC capital needs rose and available money went to the flashy new projects: a subway here, an LRT there, and of course an expressway rebuild lest those non-transit riders should be delayed on their vital journeys to and from downtown. A new class of project “below-the-line” was invented to accommodate work that was necessary, but for which money had yet to be found.

However, even getting on that unfunded list required acknowledgement that a project was necessary, and a long list of below-below-the-line work accumulated. In budgetary terms, this tactic was non “sustainable”. One cannot claim to be making a budget while ignoring over half of one’s future needs. Far from being ready to face the future, the TTC had a long queue of projects needed to refresh decades-old infrastructure, but no money to pay for them because they officially didn’t exist in the mind of fiscal planners.

This was not entirely the TTC’s fault. The City of Toronto preferred to have its transit system and appetite for capital look as if everything was in hand. The situation was not helped one bit by the prevailing attitude among some politicians that transit infrastructure, especially subways, is near-immortal while, in fact, lines dating back to the mid-20th century were showing signs of their age.

The situation was simply untenable as what once was “the future” banged loudly on Toronto’s door. In early 2019, a 15 year capital funding outlook was presented to the TTC Board including a $33.5 billion projection of capital needs to 2033.

The capital budget and ten-year plan before the Board on December 21 is not a full update of the 15-year plan, but it shows the transit funding crisis Toronto faces quite starkly. The 15 year plan’s status today is:

… the CIP has been updated and further refined in accordance with Board and Council direction, resulting in a 2021 to 2035 CIP that totals $37.7 billion, of which $10.349 billion is unfunded within the first 10 years and a total of $23.239 billion over the 15-year period. [p. 1]

The total does not in include major expansion projects beyond closeout of the Spadina extension project ($120 million), end-of-life support for the SRT ($47 million), and design work for the Waterfront LRT ($50 million). This is small change on the scale of the 15 year plan’s billions.

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TTC Operating Budget 2021

Updated December 21, 2020 at 5:50 pm: This article has been updated with additional and replacement illustrations from TTC management’s presentation to the Board at its meeting today. Explanatory text has been added or modified as needed. (The illustrations from this presentation are clearly identified by the date on them.)

Other issues were raised both by deputations and by Board members. I will deal with these in a separate article.

On Monday, December 21, the TTC Board will consider its Operating and Capital Budgets for 2021. This article deals with the Operating budget that pays for day-to-day service and maintenance. I will turn to the Capital budget that pays for major repairs and system expansion in a separate article.

Tracking the budget can be challenging even in normal times because there are so many moving parts. This year we have the collapse of demand thanks to the pandemic, together with an uncertain future for both economic and ridership recovery, not to mention government support to bridge the gap.

The table below shows how the budget has evolved over the past year. It begins, as all budgets do, with the prior year’s budget as a starting point. Normally, there would be much hand-wringing if the probable outcome were off by a tiny amount. Covid has blown such a hole in our finances that projections made a year ago bear no relation to the year as it evolved.

Along the way, there were many changes to operations through the year, but the TTC managed to keep service overall at about 85 per cent of the planned level. This percentage was not uniform across the system. Some bus routes, the very part of the network that suffered the least from ridership loss, saw substantial service cuts through the loss of their express services. As the TTC gradually restores the network, these problems will be reversed, but there is no guarantee that the system will have enough resources to deal with the combined effect of returning demand and a continued desire for social distancing.

The 2021 base budget includes various changes between 2020 and 2021. For 2021 there is a combination of new and enhanced services (a paltry amount compared to the overall budget) and a very large requirement (almost $800 million) to cover for Covid effects.

Fare and other miscellaneous revenue such as commuter parking and advertising will be down about 58 per cent over the 2021 year. This is not as deep as the losses at their worst in 2020, but ridership is projected to grow slowly through the year improving the TTC’s revenue picture, although it remains far from the pink of health.

Absent in the 2021 budget is any provision for a fare increase. Under normal circumstances this would generate about $30 million in added revenue, but fares now account for less than half of their former contribution. Mayor Tory has announced that there will be no fare increase, and this is a year in which that is a comparatively inexpensive decision. A longer-term problem will be a decision on the target level of fare revenue as operations and ridership return to normal in future years especially as covid-related subsidies disappear.

Expenses will rise by 2.4 per cent on the conventional system, although on a dollar basis, this is substantially offset by Wheel-Trans budget cuts in response to reduced demand.

The bottom line is that almost $800 million will be needed to supplement TTC’s normal revenue streams while maintaining service as planned. The arrival of such funding is far from certain, and detailed announcements probably await provincial and federal budgets for the fiscal year beginning April 1, 2021. Committed funding to date only gets the City and TTC to March 31, 2021.

Recent announcements might have sounded as if this were all new money, but in fact the status of transit funding is unknown for three quarters of 2021 starting, appropriately enough, on April 1st.

Unless otherwise noted, all tables and charts in this article come from the TTC’s Operating Budget report or from the Presentation at the Board Meeting of December 21, 2020.

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