On November 21, the TTC Board approved the fare increase proposed by staff in their Operation Budget for 2017. Adult and Senior/Student token/ticket fares will rise by ten cents to $3.00 and $2.05 respectively. Metropasses for both fare classes will rise by $4.75 with the result that the “multiple” (the ratio between the pass price and the single token/ticket) for seniors/students drops slightly (by about 0.5) while for adults it is unchanged. Here is the full table of old and new fares.

There was a long parade of deputants at the meeting who, despite a motion by Deputy Mayor Denzil Minnan-Wong to limit presentations to three minutes, mostly managed to push the envelope out to the normal five minutes simply by taking a rather long time to “wrap up” when Chair Josh Colle gave the three minute warning. Their comments overwhelmingly spoke to the effect of a fare increase, but also to the question of service quality. Despite the TTC’s claims that they are not limiting service growth and causing crowding, actual experience does not match these claims, a point echoed by Councillors who sit on the TTC Board and who receive many complaints about this from their constituents.

To soften the blow, the TTC Board voted to direct staff to prepare the 2018 budget on the basis of no fare increase so that, in effect, over a two year period fares would only have gone up five cents per year. This is a Catch-22 decision going into an election year because somehow Council will have to find the money to pay for the idea just when tax increases are regarded as political suicide, but service cuts would be equally unpalatable.

The most contentious part of the debate turned on Appendix C to the report which described various options for higher fares and lower service. Included on the list was the cost of free passes for the Blind and War Amps ($2.1 million), and even considering this shows a breathtaking insensitivity.

This was described by CEO Andy Byford as the “Armageddon Appendix” in an interview with CBC’s Metro Morning, an presents a menu of extremely unpleasant options to close the remaining gap between TTC’s planned revenue, including the fare increase, and projected costs. This amount has three components totaling $99 million:

A $35.1 million shortfall in the “conventional” system’s operating budget.

A $26.4 million shortfall in the WheelTrans operating budget.

A proposed transfer of $37.5 million from the TTC’s operating budget to the City’s capital budget. This scheme has not been endorsed by the City Manager, and is simply an accounting trick to bump the TTC subsidy without showing it as part of the annual increase. Either way, it would mean increased City spending whether as “operating expense” or “capital from current”.

Byford was at pains to emphasize that he would not recommend any of the changes, but produced the list because he was asked for it. What is missing, of course, is a sense of the effect of any of the changes at the individual level: how many riders benefit from which discounts, which services would be affected by changes to standards? It is easy for the budget hawks on Council to talk about “efficiencies” when they are single-line descriptions, a dollar amount, but with no specifics about what would happen.

For their part, members of the TTC Board seemed unable to grasp the difference between sending an unbalanced budget to Council without recommendations on how to fix it, as opposed to taking a strong stand saying “we oppose these cuts”. This evolved as the meeting wore on with some recognition of the need to take a stand, but this did not find its way into the final motions (see below).

The Board may have punted the issue over to Council, but nothing prevents Council from saying “TTC, you are only getting this much subsidy, you figure out how to deal with it”. Even a desire to save service improvements implemented at Mayor Tory’s behest will require someone to decide either on new revenues to fund transit, or on which of these improvements will die on the altar of “efficiency” and “saving taxpayer dollars”.

It is important to remember the U-turn candidate John Tory made when he discovered just how badly the Ford administration had gutted the TTC. From Tory’s speech of January 19, 2015:

Building a great future starts with ensuring our ability to move around. We will be recommending that the TTC commission and ultimately city council approve significant new funding for transit. … Today, Chair Colle and I are announcing a $95 million investment in the TTC that is both long overdue and absolutely necessary for the social and economic well-being of our city. It will see: the restoration of many bus and streetcar routes that were cut in 2011

reintroducing all-day, every-day service on bus and streetcar routes, matching them with the hours enjoyed by our subway riders

reduced waiting and crowding during off-peak times

reduced waiting and crowding on 21 of the TTC’s key routes in peak times

a series of new express bus routes

adding two additional subway trains on lines 1 and 2 during the morning and afternoon rush

expansion of the blue night network, so people coming home late or getting to work at 5 am have more options to get around, and

proof-of-payment on all streetcar routes that will speed up service and travel times for the more than 65 million annual riders who use the TTC’s extensive streetcar network This investment also includes 50 new buses and a temporary storage facility that will allow us to deliver these extra services in rush hour in the coming months. … During the election campaign I committed, along with all of the other candidates, not to raise transit fares in 2015. It was not until the transition period after the election that I was fully able to comprehend the scope and extent of the transit cutbacks imposed by the previous administration. Deliberate decisions were made under my predecessor to reduce service and increase crowding. So when the people of Toronto sensed service was much worse, they were right. But not only was service impacted. These cutbacks disproportionally hit those who needed transit service the most, particularly those living the suburbs. Transit connects people to jobs. It provides a means of getting around for people who can’t afford a car. To put it bluntly, we have starved our transit system to the breaking point.

Almost two years ago, Mayor Tory understood that transit needed substantially better funding, but by mid-2016, his outlook was that every city agency should find a 2.6% saving in their budget, not ask for an increase. (In the case of the TTC which raises most of its costs from the farebox, this saving only applies to the City’s operating subsidy.)

If the TTC were forced to absorb the entire $99 million shortfall in its 2017 budget, this would completely undo the $95 million increase. In effect, Tory would pull out his “investment” in transit to limit the pressure on property taxes. (To put this in context, a 1% property tax hike brings in about $30m annually.)

Despite the oft-repeated claim that $95 million has been added to the TTC’s budget, the actual increase over recent years is much lower (source: TTC 2017 Operating Budget report, p. 11)

The effect of the Ford years (2011-2014) is clear in this table, but there has not been an annual increase of $95m during the Tory era. Although the number is commonly cited, the actual subsidies have gone up by only $55m over Mayor Tory’s two budget cycles. Meanwhile, in current dollar terms, the subsidy per rider is lower than it was at the end of David Miller’s administration.

Notes:

these figures refer to the “conventional” TTC system and do not include any of the costs associated with WheelTrans, and

for historical accuracy, these numbers should be restated based on actual ridership and subsidy paid.

For 2017 the overall budget shows where the cost increases and savings are expected.

On the revenue side:

Although the fares will go up, this is a budget-to-budget comparison, and 2016 included a ridership projection that the system did not achieve. Therefore, the budgeted fare revenue in 2017 actually is less than in 2016.

This is partly offset by a big jump in commuter parking of $3.0m over the $9.3m received in 2016. A new tariff for parking charges is expected at a TTC Board meeting in the near future.

Within the expenses:

The CEO’s office includes functions beyond simply the senior administration of the TTC, and for 2017 will have a new group responsible for the “fitness for work” program that has already been approved by the Board. Big increases in the Operations and Service Delivery groups reflect higher base costs plus the full year effect of 2016 service improvements.

Vehicle fuel costs will drop, but not as much as they might have if the TTC were not subject to the new carbon tax. Traction power costs go up because of rising Hydro rates.

The depreciation item is dubious and will require a change in the City’s attitude to the funding of this item as discussed above.

Buried in the Operations Group’s budget is an assumption that the cost of replacing hybrid bus batteries will be shifted to the capital budget.

If the depreciation is added back in to make the figures comparable, the total expenses go from $1.737 billion in 2016 to $1.794b in 2017, an increase of 3.3%. That’s not a bad number considering the combined effect of inflation and net new costs (e.g. Presto, Spadina subway startup), but because revenues are down (relative to budget), the percentage increase in subsidy requirement is much higher at 13.4% if the depreciation figure is included.

Budget-to-budget comparisons can be misleading because any erroneous assumptions of the previous year show up as a surplus or shortfall even though these may have been corrected on an actual results basis through the year. TTC management would do well to produce comparisons with “probable actual” 2016 results to show the efforts made through the year to work within changing circumstances.

This problem will not go away in 2018, an election year. Among the budget pressures facing the TTC will be:

Annual labour cost increases under the Collective Bargaining Agreement

Inflation in the cost of utilities and material/supplies

Full year operation of the Spadina subway extension ($23 million over the part year 2017 costs)

Foregone revenue from any fare increase in 2018 (about $30 million)

Full year cost of Presto fees that will only be partly offset by reduced costs from handling discontinued legacy fare media

Operating costs for the service improvements implied by growth in the bus fleet (*)

(*) In separate reports on the Capital Budget and the Federal Government’s Public Transit Infrastructure Fund (PTIF), the TTC proposes a very large purchase of buses, and trumpets this not simply as replacements for the existing fleet, but for the ability to provide more service to riders. More service means more operating dollars and, inevitably, more subsidy. There is a direct contradiction between the TTC’s capital plans and spending constraints from Mayor Tory and his Council allies for day-to-day operations. I will deal with the Capital Budget and PTIF in a separate article.

The management recommendations were adopted with various amendments:

No fare increase for 2018.

Staff are to report on: clarification of the various loyalty programs such as VIP pass pricing and the Monthly Discount Plan, and how these might be “harmonized”, loading standards and their evolution since 1998 together with recommendations to ease crowding and build ridership in 1Q17, fare increases for the past 20 years by category with a comparison against the consumer price index (CPI) (briefing note by the end of 2016), and a breakdown of the hours of service per month by mode for the past two years (for the next Board meeting) to show how the actual amount of service provided on the street has changed.

In the event the City does not accept the transfer of costs from the operating to the capital budget, TTC management would work with the City Manager on a five-year transition plan for these costs with a report to follow by mid 2017.

A technical amendment directs and authorizes TTC staff to work with and provide information to City staff in their budget preparation.

The TTC Budget Committee will begin meeting in June 2017 to review the 2018 budget in its preliminary stages. This is ironic considering that three committee meetings in 2016 were cancelled. More generally, the TTC Board seems unwilling to devote the time to policy discussions until a decision forces itself on them, but by then time for abstract consideration of options has passed.

Although Board members/councillors Glenn De Baeremaeker and Shelley Carroll talked of amendments to explicitly reject the fare and service options in Appendix C, or to simply remove that Appendix from the report sent to Council, no motion to this effect was placed.

Motions defeated included:

John Campbell proposed that staff report on a long list of options for restructuring fares, but this was rejected as coming far too late in the process to permit a January 2017 implementation of the new tariff.

Joe Mihevc sought to defer any fare increase until after the City has set its 2017 budget.

Joe Mihevc sought to launch a publicity campaign to encourage Queen’s Park to increase transit subsidies, while Vince Crisanti simply wanted to ask that they fund the $61m shortfall. Shelley Carroll noted that such a request would directly contradict Council’s recent agreement to fund all costs for the new LRT lines and SmartTrack stations.

Vince Crisanti proposed that the VIP program be examined as a model for a low income fare program. VIP is a bulk purchase plan and not entirely appropriate for this function.

Crisanti also proposed that seniors’ fares be frozen for 2017.

The next step in this process will be the City’s Budget Launch on December 2 followed by detailed discussions leading eventually to a Council vote in mid-February.

See also:

TTC’s 2017 Operating Budget: More Creative Accounting

TTC Crowding Standards and Service