The TTC has passed a proposed Operating Budget for 2013 including, in principle, a five-cent increase to the adult fare. This budget now goes to the City of Toronto’s Budget Committee and Council for discussion and approval of the 2013 operating subsidy.

There are two components to the budget report: the budget for the “regular” TTC system and the one for Wheel-Trans.

Item Regular Wheel-Trans ($000) ($000) Fare Revenue $1,061,000 $ 5,546 Other Income 67,106 Total Income $1,128,106 $ 5,546 Expenses $1,548,794 $ 102,488 Subsidy Required 420,688 96,942 Subsidy Available * 410,951 96,823 Shortfall 9,737 119

The “Subsidy Available” shown above is based on premise that the 2012 subsidy, adjusted for the cost of arbitrated labour settlements, will be provided as a “flat lined” City subsidy in 2013. TTC management intend to continue looking for savings within the budget to whittle down the shortfall. CEO Andy Byford is adamant that he does not want to cut service, and this is the first of many challenges for TTC supporters on Council.

The operating subsidy for the regular system in 2012 was $374.1m. Adjusting for arbitrated pay increases going back to April 2011, the “flat line” value for 2013 is $411.0m, an increase of 9.9% to bring 2010 rates up to 2013. It is entirely possible that budget hawks will want an absolute freeze in subsidies. If so, then the TTC would have a big hole to fill in its budget.

Service on the regular system will be increased to meet a projected ridership of 528-million, but there is no provision for improved loading standards or minimum service levels. This is a 2.7% increase over the projected 2012 ridership of 514m. Projections for 2013 only months ago set ridership at 520m, an unreasonably low figure. With the higher number, the budget does not have a built-in shortfall in planned service.

On Wheel-Trans, there is a one-time saving by the removal of ambulatory dialysis patients from the eligibility list. This was originally intended to happen in 2012, but the decision’s effect was staved off by diverting $5m intended as subsidy for regular service to the Wheel-Trans budget. TTC Chair Karen Stintz speaks of this as a “good news” story because it is claimed that alternative transport has been found for these riders. Whether this is true, or to what degree costs are being transferred back onto riders, remains to be seen. There were no deputations at the Commission Meeting on this subject.

The fare increase is half of the amount approved in principle during the 2012 budget debates when standard ten cent increases were proposed for years 2013-15. At a five cent level, the increase is 1.9% for adult token fares. On a weighted average basis across all fare types, the increase is 1.7%. (Cash and child fares are unchanged; senior/student fares go up by 2.9% because a five cents is a larger proportion of the 2012 fare than for adults.) The proposed new fare schedule is Appendix C of the budget report.

The shortfall could be eliminated by a ten cent fare increase which is projected to raise an additional $14m net of the effect of lost riding. For many years, TTC riding tracked employment levels in Toronto, but this relationship ended at about 2009. System usage continues to rise even though employment is stagnant through a combination of discretionary and off-peak riding. Metropass sales continue to climb because the pricing, net of various incentives including discounts for various groups and the transit tax rebate, make passes an attractive way to purchase transit service.

Attracting and keeping riders, especially for discretionary trips and off-peak periods when service is less frequent, requires that service not be slashed as a “quick fix” to budget problems. This link is utterly foreign to the budget hawks at Council who see only “the taxpayer” and the “cost” of transit without recognizing that transit riders pay taxes too, and that there are benefits to the city’s economy from the mobility at modest cost provided by the transit system.

Service improvements just to keep pace with projected demand are planned for March, September and October of 2013. Although these will cost about $20m, the cost is expected to be “more than offset by increase ridership and fare revenues” (Budget report, page 6). The “and” in that statement is essential. Higher fares will generate about $18m while ridership growth will yield about $39m of the projected $57m total farebox increase.

The total TTC workforce will grow by 268 in operations (service increases) and 2 in Wheel-Trans, and will fall by 149 in the capital side of the organization as the LRT projects are transferred to Metrolinx.

The budget report (at page 8) includes a familiar table of subsidy levels for the TTC and other systems in the GTA, Canada and the USA. At 87 cents per rider, the TTC subsidy is far below that of other systems, and the 70% cost recovery rate far higher. The nearest systems to the TTC are New York ($1.25/57%), Montreal ($1.28/56%) and Calgary ($1.39/53%). Most of TTC’s regular operating subsidy comes from the City (roughly $70m of provincial gas tax flows to the TTC through the City), and all of the Wheel-Trans subsidy comes from City funds.

In 2013, farebox revenue will cover about 68.5% of expenses with a further 4.3% coming from miscellaneous revenue for a total of 72.8% .

The budget report (pages 11-13) includes a long list of “operating efficiencies”. Some of these are one-time savings in the sense that further equivalent cuts are not available (e.g. transferring responsibility for the Toronto Coach Terminal on Bay Street to its primary tenants) while others can produce ongoing savings as the scale of implementation grows (e.g. conversion from 40-foot to 60-foot articulated buses).

Most contentious of these “efficiencies” is the contracting out of services that do not require specialized labour such as cleaning and garbage handling. The proposed contract to shift bus cleaning at two garages to a private contractor was approved by a vote of 4-3 with the deciding vote cast by Commissioner Josh Colle, a Councillor whose political support from organized labour has likely evaporated.

During the debate, Commissioner Cho raised the questions of how higher wages paid to TTC union staff would affect fares and whether riders should be expected to bear the cost. In fact, the total saving of outsourcing bus cleaning is expected to be $4.3m annually when the work is completely transferred to contract staff. Based on the projected $18m revenue from a five cent fare increase, the cost of leaving cleaning work with the Amalgamated Transit Union is just over a penny per fare.

Whether labour disruptions triggered by this move will more than offset the saving remains to be seen. ATU President Bob Kinnear has stated that the union may not renew an agreement with the TTC and the Ministry of Labour allowing operators to work 64-hour weeks, considerably higher than the 48-hour maximum in the Labour Standards Act.

The ATU pegs the cost of such a change at up to $10m annually as the TTC would have to add staff to cover work now done on overtime (but without marginal increase in benefits expense). TTC Chair Stintz dismissed this cost saying it would be only a few million. This begs the question of TTC overtime practices which are routinely defended by management and Commissioners as being the lower cost option compared with having more staff working shorter hours. The ATU will take this issue to its membership for a vote because a cutback in overtime will affect all who now take advantage of it.

The complete list talks of a $50m annual saving (or cost avoidance) , but the report mixes together one-time and multi-year cost reductions and does not indicate which categories are candidates for further efficiency. This is an important distinction because the effects of inflation and system growth cannot be offset by “efficiency” forever, and future budgets cannot presume on savings at a scale comparable to past years.

The budget report (page 15) talks of pro-forma projections for 2014-15, but these numbers are not included. However, the combined effects of inflation and other cost pressures are expected to produce a “significant challenge”. Just making do with flat-lined subsidies and fare freezes will not work unless Toronto is prepared for further decline in its transit system.

In the midst of multi-billion dollar proposals for new rapid transit networks, the Commission and Council must focus on the day-to-day operation and budget of the TTC. Anyone can draw lines on a map. Ensuring that buses and streetcars arrive frequently with room for all who wish to ride in reasonable comfort is much harder. Fighting for more revenue, be it taxes or fares, just to stay in the same place, let alone improve transit service, is a thankless job, but it is one those who claim to be transit advocates must face.

Postscript

This was added about an hour after the original article was published.

I am often asked whether I support a fare increase, and my answer is inevitably “yes”. Although it would be wonderful to live in a world where money rains down on transit from various governments, that is not what will happen. The fight is just to keep what we have and keep pace with growing demand. A fare freeze undermines calls for better subsidies to provide better service and risks hobbling the TTC.

If there is a desire to subsidize transit costs for the less well-to-do, figure out how to fund such a program separately from overall fare levels. Many people are perfectly capable of paying higher fares, and they should. It is ironic that we provide lower-cost transit to groups based on age and status (seniors and students), but not on economic need.

Better transit service — reliability, frequency and capacity — is essential for “captive” riders who depend on the TTC to get around Toronto for work, school and family support trips. It is also essential for “selling” transit to those who could travel by car, and for sustaining political support for increased transit funding. “Why should I pay more and get less” is a familiar refrain, one the TTC’s funding partners often forget in their rush to “respect the taxpayers”.

Without question, Queen’s Park has not stepped up on the operating side ever since the Harris years when transit was abandoned completely. Toronto gets a paltry $70m in operating subsidy from gas taxes (the rest goes to capital projects and is inadequate on that score too), but nowhere near the 50/50 sharing of operating subsidies Toronto once knew. However, if we ever do see more Provincial money in Toronto, it must not simply be used as an offset against the City’s share, but as a way to enhance transit service.

In some mythical world with an enlightened national government in Ottawa, we might see operating funds, but far more likely would be an established program to provide capital subsidies for expansion and major infrastructure renewal.

Metrolinx is now considering its “Investment Strategy”, the problem of funding a huge build-out and operation of The Big Move’s transit map. Additional challenges lie in local transit all over the GTA where transit service carries a fraction of the travel market of Toronto, and yet local transit is an essential part of moving around the region.

Toronto Council wants to explore regional funding with its neighbours in the 905. All of this investment in building and operations will not be cheap, but it must not divert attention from the need for better funding and service within Toronto itself. Staying as good as we were last year is not enough. That was the idea behind the Ridership Growth Strategy and Transit City despite their faults, and much has been lost in the blind hatred of any Miller-era plans by the Ford crew at City Hall. The challenge for Council is to address what transit can do, what a real “transit city” can be.