Updated Tuesday, September 20, 2011 at 12:00 noon:

Toronto’s Executive Committee at its marathon meeting of September 19-20, moved that “City Council receive the following Recommendations”:

2m. TTC: Consider rolling back some of the service improvements implemented under the Ridership Growth Strategy, including changes to the crowding standard. Also consider reducing/eliminating the Blue Night Network or making it a premium service by raising fares. 2n. TTC: Review service levels of support activities to conventional transit. 2o. TTC – Wheel Trans: With conventional transit becoming significantly more accessible, the role and service levels should be continuously reviewed. Consider potentially developing individual plans for riders to use conventional services for their needs, relying less on Wheel-Trans.

While this motion indicates that Executive may want to save the all-night services, an action already taken by the TTC itself, this motion also removes the idea of rolling back service standards to pre-RGS levels. Given that the TTC has just approved such an action, and has the right to do so independently of Council, it is unclear just what the policy of the two bodies would be.

The original article from September 14 follows the break below.

On Friday, September 16, the TTC will discuss proposed changes to its 2012 budgets to bring Operating, Wheel-Trans and Capital spending within the funding available from the City of Toronto and other governments.

“Available” is the key word here because, in the setting of an artificially created budget “crisis”, what the City chooses to spend on transit is not the same as what it can afford to spend. What will actually happen for 2012 won’t be known until Council finalizes its budget in February, and after the political situation at Queen’s Park is settled in October 6th’s election.

TTC staff made several recommendations to the Commission, and significant changes are unlikely at this stage. The real debates will happen elsewhere.

Once again, the TTC proposes:

… the development of a multi-year fare, service, subsidy strategy in conjunction with the City of Toronto, taking into consideration appropriate targets for ridership levels, service initiatives and revenue/cost ratios

Every year, budget, fares and service levels are addressed in a crisis atmosphere with no sense of the City’s overall goals for its transit system. The cost of providing service will continue to grow whatever standards we set unless these are so Draconian that they trigger a downward spiral in riding and service. The City, the TTC and riders must accept that whatever “efficiencies” are implemented, these are one-time changes that cannot be repeated in future years. At the very least, a projection of future costs and system performance are essential to informed debate about transit funding. Whether we will actually have this debate, or simply wait for another budget “crisis” to repeat the 2012 process, remains to be seen.

TTC Operating and Wheel Trans Budget Amendments

TTC Capital Budget Amendments

Operating Budget Proposals

TTC ridership will grow beyond 500-million for the first time in its history in 2012, even allowing for the effects of a proposed fare increase and service cuts. Operating subsidy from the City will fall in 2012 from $429m to $383m. If the same allocation of Provincial gas tax revenue is applied in 2012 as in 2011, then $90m of that City subsidy will be covered from Queen’s Park.

In the preliminary budget (June 2011), total operating expenses of $1.507-billion were projected, with revenues of $1.039b (mostly fares). The combined effect of the City cutback and projected cost increases left an $85m hole in the budget. The proposed amendments address that gap.

Diesel Fuel

The projected increase in diesel fuel pricing is now expected to be lower than originally thought, and this shaves $15m from operating expenses.

Staff Reductions

The TTC plans to reduce staff in several areas, although the details are not included in the public report. This will lower costs by $14m in 2012 and $16 in future years for the reduction of 212 positions. (This is equivalent to $75k per year, per position, including benefits.)

Service Standards

Loading standards will be rolled back to 2003 levels. For peak period service, the target loads will be 10% higher than they are today, and this will cause more crowding especially on busy routes. (On routes with wider headways, the incremental effect of removing one bus is greater, and even the new loading standards would be violated if service were cut.) About 50 routes will be affected. The diminishing returns available through this tactic are shown clearly by the gross and net savings.

Gross operating cost saving $9.2m Ridership loss 1.9m Fare revenue lost $3.7m Net operating cost saving $5.5m

Off peak standards which, in theory, mean that everyone should get a seat, will go back to allowing 20% of riders to stand on routes with headways of 10 minutes or better. It’s no secret that many routes already breach this standard, and we are likely to see much worse actual service on many routes than the advertised “standard”. The projected effect of these changes is:

Gross operating cost saving $11.7m Ridership loss 1.8m Fare revenue lost $ 3.5m Net operating cost saving $ 8.2m

The total saving is expected to be $14m, and will reduce the operating staff level by 171.

Notable by its absence is the more general discussion of Service Standards. This is relevant on several counts.

The cutbacks early in 2011 were based on a newly created standard that a route should carry at least 15 riders per vehicle hour to justify its existence.

Although the existing standards include a walking distance criterion for evaluating new routes, this was ignored in the 2011 service cuts when large gaps in the route network were created, notably late on Sunday evenings.

The criteria that would be used to justify reintroduction of service, indeed the entire concept that new or reactivated service might be required in future years, have been ignored.

Advertising

The recently awarded new contract for advertising will bring $5m more in 2012 than originally expected.

Miscellaneous

Improved employee attendance and associated overtime: $5m

Increased gapping (not filling vacant positions as soon as possible): $2m

Non-labour expenses (promotional campaigns, contracted security service and others): $2m

Benefits (updated cost estimate): $2m

Other (including elimination of a one-time provision for a property settlement that is no longer required): $5m

These changes bring a total of $64m in savings leaving a gap of $21m to be filled by other means.

Metropass Riding and Off-Peak Growth

Of the projected 15m new rides in 2012, 3.3m of these are due to the increasing use of Metropasses (more rides are taken for each pass purchased). These rides are mainly taken in off-peak periods, and the TTC proposes not to add any service as it receives no marginal revenue for them.

How the TTC will distinguish between individual fare ridership growth on routes, and growth due to the “freeloading” pass users is a mystery. Possibly a separate, overcrowded section will be reserved on buses and streetcars for passholders.

Accident Claims

On May 12, 2011, the Ontario Budget exempted all public transit organizations from no-fault insurance. This will save the TTC “several millions”, according to the preliminary budget, but the effect will occur gradually as the mix of settlements shifts from accidents prior to May 12 to those which occurred after the exemption was in place. No allowance has been made in the 2012 estimates for this benefit pending actual experience and cost data.

Night Service

The TTC report is silent on the issue of the Blue Night Network, although a proposed elimination of service has been discussed at length in the press. This scheme arose as one of many suggestions in the “Core Service Review” now underway at the City. The lack of detailed analysis of this proposal by the City or of a rebuttal from the TTC is troubling. Retention of night service is mainly discussed as one of social benefit for shift workers on lower incomes rather than in the wider context of the value of transit service.

According to the Toronto Star, the night routes are used by about 12,000 riders per day. This service is provided by 42 buses and 7 streetcars, a total of 49 vehicles. The night services operate from 2 to 5 am, or three hours per day. That gives us a total of 147 vehicle hours.

If we use the current TTC productivity standard for marginal routes (15 riders per vehicle hour), we would expect to see about 2,200 riders on the night routes, but we actually have over 5 times that number. Obviously route performance figures vary with the subway replacement services doing much better than some other lines, but the numbers suggest that at least part of the night services are justified by the standards used for the rest of the day.

Clearly there is an assumption that night services cannot be justified, and the City (or their consultant) didn’t bother looking further to compare these with the system as a whole.

Proposals Not Adopted

The TTC reviewed several other possible changes, but staff rejected them. These are worth noting if only because budget hawks may attempt to hack away even more deeply at service than the staff proposals.

Metropass transferability: Staff estimate that about $5m would be added to revenues if this option were eliminated, but the offsetting concern is that re-activating the photo-id requirement would lead to conflicts with front-line staff. Also, there’s the obvious point that Presto fare cards are transferable, and with the TTC moving to that fare medium, a return to photo ids for Metropasses would be a short-lived benefit.

Poor-performing routes: If the productivity measure were changed from 15 riders per vehicle hour to 30, cuts beyond those implemented in May 2011 would occur. This would affect about 80 routes with a net saving of $20.9m. (Note that the night services, taken as a group, would still perform better than this standard.)

Hourly headways: The maximum policy headway now is 30 minutes. Hourly headways have been tried in the past, but in practice they attract very little riding as it is simpler to take an alternate route or mode, or not travel at all, than to wait for an hourly bus that may or may not be on schedule.

Fare Increase

A 10-cent increase on the basic fare (4% on the token rate of $2.50) would bring about $30m in revenue if it were implemented in January. This option will be considered later in the budgeting process once the will of Council, and their desire to override the Mayor’s preference for a continued fare freeze, are known.

Ironically, City Executive Committee will consider a report on Monday, September 19, which proposes a policy that all “user fees” be indexed to inflation and automatically rise each year. Although the authority to approve the specifics of an increase would remain with the TTC, it would be City policy that such an increase should occur.

Contracting Out

The TTC is reviewing the possibility of contracting out various services many of which are performed by unionized trade staff. There is no provision in the budget for any saving son this account because the extent of the saving and the timeframe for implementation are not yet known. 500 or more positions may be affected.

Wheel Trans Budget Proposals



Unlike the regular TTC system, Wheel Trans receives far less of its revenue from fares and is far more seriously affected by cuts in subsidies and extraordinary increases in operating costs.

In the June 2011 Preliminary Budget, the projected shortfall was $16m on a total of $103.6m in expenses. Over half of the shortfall was a direct result in the City’s subsidy cutback by $9.1m.

The most contentious change proposed for Wheel Trans is that ambulatory dialysis patients would no longer be carried. This change affects patients whose ability to walk more than a short distance, especially after treatment, may be limited.

The staff report claims that the Advisory Committee on Accessible Transportation (ACAT) supports this position. I will be intrigued to see whether they confirm this when challenged by those who will lose the service. Minutes of ACAT’s meetings suggest that there is a concern that other patients (e.g. chemotherapy) would ask for similar Wheel Trans eligibility, but it is unclear what ACAT’s position is as there is no record of an actual decision on this point.

The TTC is attempting to get special funding from Queen’s Park to cover this cost, but considering that there is no Provincial subsidy for Wheel Trans today, it’s an odd concept that dialysis patients would be made a special case.

This change, if implemented, will reduce Wheel Trans costs by $5m. Other changes would yield a total of $3m. This leaves $8m still to be found.

If this were done through service cutbacks, the unaccommodated trip rate would rise to 18%, and Wheel Trans would lose about half a million rides. Combined with the dialysis proposal, Wheel-Trans would lose over 1/5 of its riding.

In a City and Province where increased accessibility is a matter of law and long-standing practice, such a move would be atrocious policy. This is not “gravy”.

Capital Budget and 10 Year Forecast

Capital funding for the TTC comes from a variety of sources (see Appendix B in the report), but many of these are at or close to their sunset dates. Much funding is tied to specific projects, and with the Metrolinx takeover of the Eglinton project, “Toronto” funding is not even on the TTC’s books.

As I have discussed before, there is a large ongoing need for capital funding just to keep aging infrastructure and equipment up-to-date. The original investment in the subway system is wearing out, and this produces a jump in yearly renewal costs relative to historic spending levels.

In order to address the shortfall, the TTC proposes several changes in their current and future capital program.

Bus Purchases

With the change in Service Standards, the TTC will not need as large a fleet. 134 buses that were to be purchased mainly in 2013-14 have been deleted from the budget. This change eliminates the need to store a “bulge” in the bus fleet that would exist due to service growth before new rapid transit lines open and displace or reduce existing bus routes. The combined savings are $73m.

Subway Car Purchases

A proposal to buy 10 additional TR trainsets as an add-on to the current order will not proceed. This also eliminates (or at least defers) many other projects related to subway capacity including yard expansion and new storage north of Finch Station. Within the budget this saves $343m, although some of this will eventually reappear in future proposals.

The scheme to buy more TR sets was intended to allow continuous production at Thunder Bay and a better price than would be obtained for a completely new order. However, growth plans for the subway are unsettled both due to funding problems, and because of the complex interaction of yard and line capacity, signalling and fleet size.

I have written before about the lack of coherent planning by the TTC for various aspects of the subway system, and I hope that this deferral signals that a comprehensive, integrated review will now take place. Fragmentary planning has led to the “one more thing” style of budgeting that makes 10-year projections worthless.

Bloor Danforth Automatic Train Control

Conversion of the BD line to ATC was originally proposed to begin in 2016 in part to address rising demand and the limitations of the existing signals. However, the Eglinton line is now projected to divert riding from BD to the extent that service can operate within existing constraints. Therefore an early conversion to ATC has been dropped from the budget at a saving of $150m (within the 10 year projection).

What that cost estimate did not include was the need to retrofit the T1 fleet with ATC gear (or to prematurely retire these cars), to purchase more subway trains for increased capacity and to provide the yard space for storage and maintenance of a larger fleet.

LRV Purchase

The order for new cars will be reduced from 204 to 189, a number considered sufficient for demand to 2021. The future need for more cars will re-examined toward the end of the delivery period should circumstances change.

Part of this reduction relates to maximum policy headways and the effect of larger cars on the frequency of service. The TTC has jettisoned its previous commitment to avoid very wide headways without any discussion or details of the specific effects on service.

The TTC also plans to ask Bombardier about changing the payment schedule under the contract to defer payments into later years. In effect, the TTC would have Bombardier finance the project hoping that improved future funding will catch up with payment requirements.

The total saving from dropping 15 cars is $82m. However, not all of this shows up in the 2012-21 projection for City funding because:

$11.2m is applicable to the 2011 budget (progress payments based on the original order size)

Of the $70.8m remaining, 1/3 is paid for by Queen’s Park

Other Projects

Some other projects have been rescheduled or adjusted to take account of changed circumstances:

Fire Ventillation Upgrades ($39.2m): Some work has been deferred beyond 2021

Collector Booth Renewals ($8m): Requirements for collectors’ booths will change with the implementation of Presto fare cards.

Paving ($50m): Some paving work has been deferred beyond 2021. There will be some offsetting increase in the Operating budget for repairs pending completion of this work.

Bus Rebuilds ($1.3m additional): Some 2011 work has been deferred beyond 2011 and therefore now appears in the current projections.

Garage Subsurface Remediation ($5.6m additional): New work required.

Revenue Operations Facility ($2m additional): Updated cost projection.

These changes do not eliminate the TTC’s capital problems, and funding issues will be back on the table in 2013. Without new sources of capital revenue, the TTC will not be able to sustain even its revised Capital program. Among the affected projects is the Ashbridges Bay Carhouse, but this is only one of a long list.

What is missing from the budget report is a consolidated project list showing what is funded, what is not, and the degree to which projects are linked (i.e. funding project “A” requires that one also fund “B” and “C”). As things stand, one must read both the Preliminary Budget and the proposed amendments, not to mention be familiar with many details that appear only in the budget books. Those books have not yet been published for the 2012 cycle.

TTC Capital Planning has survived for past years on one-time project funding, project deferrals, and a lot of creative accounting. In a few large projects, we are now seeing schemes to offload financing and assets to other governments or companies, or (with Presto) to pay for future capital costs from operating savings that may or may not actually materialize. The fundamental problem is that transit infrastructure in Toronto costs a lot of money to own, maintain and renew, and the regional value of these assets is not reflected in Provincial funding policy.

Some day, Metrolinx may actually deliver its “Investment Strategy”, and this must include proper capital and operating funding for local transit systems including the TTC.