Earlier this summer councillors directed city staff to give them a five-year overview of HSR enhancements, overtime, ridership and revenue.

The report landed this week. It doesn't make for happy reading.

As Coun. Chad Collins noted, with a projected budget shortfall of $2.5 million, 2017 is shaping up to be one of the worst years on record, surpassing previous shortfalls by roughly $1 million.

What's causing the red ink?

The sad truth is declining ridership and worker absenteeism continues to plague HSR in a big way.

According to the report, data suggests that overtime due to absenteeism has doubled since 2012 and is the "root cause" of most of the shortfall. That's not exactly a confidence-builder given that councillors are now pushing to have HSR run the coming LRT system.

But the picture isn't much brighter at the fare box.

So far this year, forecasted revenue is down $980,000 and ridership is down about 40,000, setting the stage for three consecutive years of declining passenger numbers.

It's far from clear why, despite this downward trend, HSR managers continue to forecast rising ridership and revenue.

Maybe they're hoping that municipal investments of about $20 million that were made over the last five years on operations, service enhancements and capital projects will bear fruit.

Or maybe they're hoping back-to-back fare increases in 2015 and 2016 would boost the bottom line.

Regardless, transit critics view the optimistic forecasts as bordering on delusional. They argue the city chronically underfunds HSR and point to the fact councillors this year voted to delay planned service improvements — including new buses and 34,000 hours of extra service — as further evidence transit funding isn't taken seriously enough.

But absent pumping more dollars into the system, what steps are being taken to turn the spluttering bus around?

Part of the overtime problem is that when HSR drivers phone in sick or fail to show, other drivers are called in to maintain service levels, which generally means overtime.

Staff say a number of initiatives to tame absenteeism seem to be having a positive effect insofar as the year-end forecast for overtime is showing a "slight decline."

But, as Collins asked, how are they going to get more people on the bus? Everyone knows transit ridership is declining across North America. What's management's plan for dealing with it?

Interestingly, staff speculates that the growth of Uber and car share services plus the popularity of the SoBi bike share program with millennials may be contributing to the downturn. Public works general manager Dan McKinnon says a key strategy will be figuring out how to collaborate with those programs instead of competing with them.

Good luck with that. Still, McKinnon believes the greatest opportunity for growing ridership is studying each and every bus route "to help us understand where we need to make investments to improve the experience that riders have on the system."

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To do that they need hard data and to get it they're equipping the city's entire fleet of 251 buses with automated passenger counters to gather ridership information for specific routes. The $4.3-million cost is being split equally between the city and federal government.

Currently 25 buses are equipped with the counters but a "technical glitch" is impeding their accuracy. Staff expects to have the problem solved in the next month or so. The counters will then be installed on the rest of the fleet.

The electronic gizmos will certainly be more accurate than the current method of estimating ridership by manually counting heads. But that could prove to be a two-edged sword. If it turns out that ridership is even lower than previously estimated, Hamilton could see a drop in its provincial gas tax revenue, which is based on transit ridership and population.