Toronto Council’s Budget Committee has been working through budget proposals from all departments and agencies in recent days. On January 19, it was the TTC’s turn.
Normally this step in the slow march to Council approval is simply a rehash of material presented at the TTC Board. However, in light of the return to greater restrictions on public gatherings, there has been a drop in ridership significant enough that the operating budget has been updated. This article reviews the changes.
- TTC 2022 Operating Budget
- TTC 2022 Operating Budget: Board Meeting Follow-Up
- TTC 2022 Operating Budget (3)
Ridership, measured as a percentage of pre-pandemic levels, has been trending up through the fall, but has dropped off again since the move to close or restrict many activities.
The fall also shows up in average bus occupancy numbers.
When the TTC set its 2022 operating budget, the drops shown above were not yet reflected in the stats.
Their projection for 2022 ridership fell in a band based on the experience to date with system recovery, but this has now been modified. The TTC now aims to be back to the low end of its projected demand by Q3 2022. This will create a shortfall in revenue compared to budget of about $100 million.
The revised and original operating budget proposals are shown below.
The original version is in a somewhat different format from the TTC’s budget presentation at their Board.
The columns of interest are the “2022 Budget” in the revised version, and the “2022 Recommended Budget” in the original.
|Total City Funding excluding COVID||851||851||0|
The additional $100 million has been added to the City’s list of items for which it seeks provincial and federal assistance.
Provincial Gas Tax
In normal years, the City divides the provincial gas tax share it receives from Ontario between the operating and capital budgets, with $90 million going to operating and the rest to capital. In 2020, because of the extraordinary strain on operating revenues, all of the provincial gas tax went to operations. The City plans to return to the standard practice of splitting this revenue between the two budgets in 2022.
The province recently announced that the total gas tax funding for municipal transit would be $375.6 million. Of this, $120.4 million is a “top up” to the share that would have flowed to municipalities under the usual formula of two cents/litre, but for reduced fuel consumption during the pandemic.
Toronto will receive $185.1 million.
Without the one-time top-up, this is a revenue stream that can fluctuate with the economy and with changes in the mix of fuel efficient and electric vehicles across the province.
Covid vs non-Covid Budgets
An intriguing issue in the City and TTC’s reported year-end projection is a conflict between the financial situation each of them reports:
- The TTC will post an unexpected surplus of about $36 million (revenue including subsidies in excess of actual expenses). This will go into a City reserve fund for transit.
- The City reports a shortfall of $75 million for transit-related Covid costs that has not yet been paid by either the provincial or federal government.
I asked the City to explain this, and they replied that, in effect, there are separate budget lines for “normal” operations and costs related to Covid.
The 2021 Operating Budget for the TTC was developed with $796 million in anticipated COVID-19 impacts. COVID-19 related financial impacts across the City were identified and included in Agency and Divisional budgets, while COVID-19 support funding from the Government of Canada and Province of Ontario were consolidated between the various Safe Restart Agreement (SRA) streams and budgeted for corporately by the City. While the TTC has experienced 2021 COVID-19 financial impacts in the form of lost revenue and added costs that has been consistent with the $796 million budgeted estimate, there is $75 million in outstanding funding support to address these COVID-19 transit impacts experienced in 2021, reflected as a revenue/COVID-19 funding shortfall in the City’s budget.
City and TTC staff continue to dialog with our Federal and Provincial counterparts and consistent with commitments in the provincial Fall Economic Statement, expect to receive full SRA funding support for 2021 COVID-19 financial impacts.Stephen Conforti, Executive Director, Financial Planning Division, City of Toronto by email, January 18, 2022
I asked for a clarification of this, and the City replied:
While there is only one budget for the TTC, COVID-19 support funding for Transit, Shelters, Public Health, Long-term Care, etc. was budgeted separately within the City’s corporate revenue budget. As a result, the net budget for the TTC increased by $796 million in 2021 to account for COVID-19 impacts (lost revenues and added costs), with the offset in the form of expected COVID-19 support funding residing in the City’s corporate revenue budget.
Given that the COVID-19 funding shortfall of $75 million specific to transit costs resides in the City’s corporate revenue budget, the deficit created by this funding shortfall is reflected and reported in the City’s accounts and referenced in TTC variance reporting.Stephen Conforti, Executive Director, Financial Planning Division, City of Toronto by email, January 21, 2022
What has happened, rather oddly, is that thanks to the downturn in service levels due to both the vaccination mandate and TTC’s service trimming, the TTC’s costs dropped, but ridership stayed strong almost to the end of the year. This predates the effect of the restrictions on ridership seen in the charts above.
The result was that the TTC will not need all of the subsidy draw originally budgeted, and the “surplus” will go into the transit reserve following City policy. Also, a planned draw on that reserve in the 2021 budget will not be needed. The final amount of that “surplus” will depend on the effects of ridership and revenue drops in late December 2021.
For 2022, a draw of $20.7 million is planned on the transit reserve.