At its September 24 meeting, the TTC board considered several items, among them the quarterly financial update and a preview of the 2025 budget.
2024 Projected Results
The TTC expects to end the year with a lower than budgeted gap between revenue and expenses. Revenues are running ahead of projections because of strong ridership and a higher than expected average fare. For the six months to June, revenues are $15.6-million above budget. In turn, this translates to a better position going into the 2025 budget cycle.
Expenses are running below budget through a combination of unfilled vacancies and savings due to timing changes in some work. The projected year-end position is that the TTC will come in $52.2-million below its net budget (the portion requiring subsidy).
Ridership reached 81% of pre-covid levels in fiscal period 6 (most of the month of June) and is expected to hit 81.5% by the fourth quarter.
Note that ridership and revenue recovery are not the same thing because, allowing for inflation, the value of a fare has dropped while operating costs continued to rise.
Looking ahead to the next two years, there continue to be pressures on the TTC’s operating budget. As things currently stand, service increases will be small with the major changes coming when Lines 5 and 6 open, a date that is still not announced by Metrolinx.
The City’s target is for a 0% change in TTC funding. This is not as straightforward as it seems. Budgets are struck on a budget-to-budget basis, not actual-to-budget, and so the starting point is the budgeted subsidy in 2024. This arrangement has been in place for many years, and it gives an incentive for the TTC to end the year in a “surplus” position. Other aspects are changes, if any, in external subsidies and which aspects of TTC costs these offset. For example, the extra cost of Lines 5 and 6 are substantially covered by a new, albeit temporary, provincial subsidy and the City does not face this cost at least for 2025 and 2026.
The “Reserve Draw Reversal” is an accounting adjustment. Originally, the 2024 budget included a $15-million withdrawal from a reserve, but this was not required and will not be carried forward into 2025. Therefore, on a budget-to-budget basis this item shows up as reduced revenue. Like the “surplus”, this tactic is also fairly common in TTC budget planning.
Challenges the TTC recognizes going into 2025 include:
- The need for attracting riders through “customer experience and satisfaction”
- Changing demographics of Toronto
- The ability to meet the 0% target without affecting service
- Limited funding for state of good repair (this is the Operating Budget component that covers day-to-day work as opposed to major overhauls and asset replacement)
The Mayor’s Vision
The meeting agenda includes a letter from Mayor Chow regarding the hiring of a new permanent CEO.
We must be a city where people choose transit first because it’s the fastest, safest and most convenient choice to get to work, school or run errands – everywhere.
Imagine a city where a commuter taps their card to enter, paying an affordable fare, and then takes a working escalator or elevator down to the subway platform. The station is clean and well-maintained, the message board is working and tells them their train is on time. People aren’t crowded shoulder to shoulder waiting to get on the train, only to be shoulder to shoulder during their ride. If while they wait they feel unsafe, there’s someone there to help them. And they can rely on high quality public WiFi or cell service to chat with a friend or send that important text to a family member.
Imagine a system with far-reaching, frequent bus service. Where riders aren’t bundled up for 20-30 minutes outdoors, waiting for bunched buses to arrive. Where transfers are easy and reliable. Where there is always room to get on board. Where people can trust their bus to get them to work and home to their families on time.
In short, to make the TTC the better way again it needs to be reliable, safe and remain affordable.
People have to be able to count on their train, streetcar or bus to arrive on time, and to get them where they are going quickly – without surprise route changes, delays or bunching. Vehicles, tracks, stations and stops should be proactively maintained and in a state of good repair. Riders and transit workers should feel safe and respected on the system.
That’s a fine vision for what transit should be, but it does not align with the budget process now underway, nor with the projected level of service additions in the next few years.
Continue reading
Steve Munro 