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TTC management: Competent or Mediocre

Ansem

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http://thestar.ca/news/gta/article/699522

Paul Moloney
Tess Kalinowski
Staff Reporters

The TTC's success has helped create a $17.4 million deficit, a shortfall that could erode potential savings from the civic workers' strike.

Ridership is running at a record high, projected to hit 473 million rides this year, without even a recessionary dent. But revenue per passenger is lower because more people are buying cheaper, transferable Metropasses – at a loss to the fare box of about 3 cents a ride. Sales of discount senior and student fares are up as well.

Savings from the civic workers' strike may be used to offset the TTC shortfall. Preliminary figures presented to the budget committee yesterday show the 39-day summer walkout saved the city at least $20 million.

However, that number doesn't reflect costs or savings from the waste and water departments. The final tally will be presented to the executive committee on Oct. 2.

That tab will factor in additional strike costs, including extra security, legal fees for hiring outside lawyers and costs of trucking more garbage to landfill.

During the strike, it was suggested the savings could be used to lower the property tax increase for 2010.

That's looking less likely, given the $17.4 million shortfall the TTC faces by the end of the year. That amount includes a $2.3 million loss in advertising revenues.

The TTC had budgeted for $904 million in total revenue for the year. The shortfall will be discussed at tomorrow's commission meeting.

"They're saying you saved $20 million from the strike, but you throw in this other stuff and it kind of washes out, more or less," said Councillor Paul Ainslie, vice-chair of council's budget committee.

The TTC is being asked to cut back on spending immediately, by curtailing overtime, trimming discretionary spending and reviewing hiring needs. Officials say there are no plans to cut service, and Mayor David Miller has pledged not to raise fares in 2009, to spare people struggling with the recession.

The success of the Metropass stems from the fact it's cheaper than tokens, is transferable and can be purchased with Air Miles. Using it also makes it possible to get a federal tax credit, said Michael Roschlau, president of the Canadian Urban Transit Association. "That (revenue drop) could be the case where you're having a migration of people moving off of cash or tokens onto Metropasses, and taking more rides at a lower cost per ride."

Councillor Joe Mihevc, who reviews TTC budgets as part of the budget committee, confirmed that riders are now paying a lower average fare. The TTC has been taking in an average of $1.77 per trip. It had expected about $1.80. The loss of just 3 cents a ride makes a difference over millions of rides.
 
When reading the comments, it is very strange that you can ''be in the red'' because you increased your ridership...''a record ridership''

Something is seriously wrong in that company and Adam's face pretty much says everything needed to be said.

Adam:huh?
 
Steve Munro's post about this is pretty good. He probably knows TTC management better than anyone.

http://stevemunro.ca/?p=2638

Those Too-Popular Metropasses

Today’s Toronto Star reports that the TTC faces a $17-million shortfall in revenue thanks to increasing use of Metropasses. More riders than predicted use passes, and this reduces the average fare per rider.

No big surprise: people are using the TTC more, and as rides per month go up, the Metropass becomes more attractive. Surprise! The TTC underestimated this effect, and once again we hear about “losing money†on pass riders.

We â€lose money†on every rider including those who use tokens instead of cash, who ride at reduced rates for children, students and seniors. We “lose money†on riders who travel for a single fare across the breadth of the city.

This sort of spin comes out regularly in TTC financial reports, and the anti-Metropass bias has been clear for years. Never mind that we get more people on the system, that we make it more attractive for regular users, that this addresses a larger goal of City planning.

Hoping to find more background on this article, I turned to the Budget Committee agenda for a recent meeting. A long report deals with variations in the Operating Budgets for the City and its agencies.

* Page 23: The shortfall in revenue due to higher than budgeted use of passes and concession fares is $5.7-million to June 30. The TTC report (see below) from which this is taken projects $9-million to year-end.
* Page 23: The shortfall in advertising revenue is $2.3-million for the year.
* Page 38 (Appendix E): Total expenditures are projected at $3.5-million over budget (see below).
* Page 40 (Appendix F): Total revenues are projected at $12.7-million under budget.

Despite the effect of the municipal strike, TTC expects its 2009 ridership to hit the budget target of 473-million (page 8). The Star article reports that the average fare per rider is three cents lower than expected, but this works out to $14-million.

Sales of Metropasses were expected to fall once they could no longer be used to access TTC parking lots, but this didn’t happen.

Ridership was slightly above budget in April primarily due to higher than forecast Metropass sales. The higher than expected sales were driven by two factors. A small decline in Metropass sales had been forecast to accompany the elimination of free parking at commuter parking lots. Sales did not decline, rather than leaving the TTC, patrons found a different way of getting to the stations whether that was walking, taking the bus or getting dropped off. The other reason is the impact the threat of a strike in April 2008 had on sales last year. Although a small amount was included in the 2009 budget estimate to take this into account, it appears that the effect was under-estimated and there was a strong recapture of pass riders in April 2009. Ridership was essentially on budget during May. [Chief General Manager's Report from the August 26, 2009 Commission Meeting, page 2]

From this report, we also learn that parking revenue is expected to fall $0.4-million under budget and “other income†(mainly interest) will be $1.0-million short.

The expenditure overrun is the combined effect of several factors.

Year-end expenses are currently projected to be 0.3% ($3.5 million) over budget largely due to unbudgeted emergency flood and mould remediation and restoration work required in the Inglis Building ($1.4M); the requirement for more service resulting from City construction activities ($2M); additional overtime requirements due to higher than anticipated gapping, service maintenance backlog and operating in severe winter conditions ($3.1M); vehicle maintenance needs ($4M); and other changes ($1.5M). These increases have been significantly offset by lower hydro and natural gas rates and reduced water consumption ($4.7M); other employee cost reductions primarily due to improved attendance and safety performance resulting from various initiatives currently underway ($2M); and planned service reductions ($1.8M). [CGM report linked above, page 4]

All in all, the TTC will be about $17-million off on a budget of $1.3-billion, about 1.3%. No agency, certainly not the City, is able to exactly match budget numbers, and the City report shows large variations in many agencies.

The TTC spins its budget problem as the fault of Metropass sales, but this is only one part of many complex revenue and expense factors. The TTC must stop blaming its most loyal customers for its financial difficulties.
 
Why blame the TTC ... blame the people ...

The TTC is one of the least subsided transit systems in North America (the least possibly?) this was a way of attracting more ridership, and it worked, what I find odd is that the TTC would not be able to predict this. Although, lest not forget 17 million is only what ? 1.5% of the total budget, relatively minor in that sense.
 
When reading the comments, it is very strange that you can ''be in the red'' because you increased your ridership...''a record ridership''

Something is seriously wrong in that company and Adam's face pretty much says everything needed to be said.

Same thing happens at Mac's or any corner store. Coke and Milk, for example, is a loss leader. They sell coke below the price they pay to get you into the store where you hopefully buy something else. The more coke they sell, the more it costs the store.

TTC and roads are a loss leader for Toronto/Ontario/Canada. They use the TTC to make the city more appealing to people who might move here and pay property taxes, income taxes, etc.

The higher the TTC usage the more subsidy is required, just like Coke or Milk at many convenience stores BUT Canada/Ontario/Toronto have been beating inflation most years in tax collection; so this policy seems to be working out okay.
 
When reading the comments, it is very strange that you can ''be in the red'' because you increased your ridership...''a record ridership''

Something is seriously wrong in that company and Adam's face pretty much says everything needed to be said.

Adam:huh?

Because it's a public service. It's not that difficult to understand.

If there is a record number of house fires this year, then the fire department would require a bigger budget, right?

Yet your math technique will tell us that we need a smaller fire dept. budget because there is a record number of fires?
 
just wow....

public transit lose money... REALLLY???? HOW COULD THAT BE????

sigh...
 
When reading the comments, it is very strange that you can ''be in the red'' because you increased your ridership...''a record ridership''

Something is seriously wrong in that company and Adam's face pretty much says everything needed to be said.

Adam:huh?

All transit systems in North America charge less for service than it costs to provide. TTC actually has one of the highest farebox recovery levels on the continent. It's much better than, say, YRT's -- YRT subsidies are relatively generous compared to TTC's, and that inequality would have to be addressed in any hypothetical amalgamation.

For TTC to make money on increased ridership, they would have to roughly double their fares while maintaining ridership. Otherwise, they will continue to lose money on every rider.

The fare freeze this year is frankly stupid.
 
just wow....

public transit lose money... REALLLY???? HOW COULD THAT BE????

sigh...

they have to pay massive royalties to the crayola crayon company in order to use the colour red.
 
I don't really see what the big deal is about missing a billion dollar revenue estimate by a few millions. As much as I am sure the TTC sucks at life, I don't expect them to be able to predict the future perfectly.

I also don't see what the big deal about fare hikes are. 2.25-2.75 is not very much money, and I for one would be willing to pay more for improved services. Even if the TTC fare was 5$, it would still be cheaper than insuring a car, gassing it and parking downtown daily. The main costs I incur taking the TTC as it is are time-costs, so I am sympathetic to paying more for faster service. There is breaking point somewhere, but I'm pretty sure many people consider the biggest weakness of the TTC it's generally higher travel times vs. a car.

The caveat would be I still think the TTC is run like CN Rail in the '80s, overextended union ridden basket case. Am I paying for better bus service, or paying for someone to earn six figure salaries counting change?
 
The caveat would be I still think the TTC is run like CN Rail in the '80s, overextended union ridden basket case. Am I paying for better bus service, or paying for someone to earn six figure salaries counting change?
In 1998 the TTC averaged an operating cost of $1.15 per ride. Indexed to inflation that would be equivalent to $1.84 today. In 2009 the cost per ride average is $2.75, 49% above inflation.


From Posted Toronto;

The Toronto Transit Commission will transport roughly the same number of people this year as it did 20 years ago. But with 25% more staff.

In 1988, 9,963 TTC staff transported 464 million people. In 2009, 12,411 TTC staff will transport 473 million people. That’s 2,448 more staff to move 2% more people.

The TTC, once the poster child of an efficient transit service, is becoming the thing that its former lean-and-mean leader, David Gunn, hated the most: a bloated bureaucracy. The TTC this year is continuing a spending and hiring bonanza: spending is up 10.4% and the TTC is hiring 508 new staff.

TTC brass will protest: We’re adding service! True, except that just 222 of the 508 new staff are drivers.
 
In 1998 the TTC averaged an operating cost of $1.15 per ride. Indexed to inflation that would be equivalent to $1.84 today. In 2009 the cost per ride average is $2.75, 49% above inflation.


From Posted Toronto;

The Toronto Transit Commission will transport roughly the same number of people this year as it did 20 years ago. But with 25% more staff.

In 1988, 9,963 TTC staff transported 464 million people. In 2009, 12,411 TTC staff will transport 473 million people. That’s 2,448 more staff to move 2% more people.

The TTC, once the poster child of an efficient transit service, is becoming the thing that its former lean-and-mean leader, David Gunn, hated the most: a bloated bureaucracy. The TTC this year is continuing a spending and hiring bonanza: spending is up 10.4% and the TTC is hiring 508 new staff.

TTC brass will protest: We’re adding service! True, except that just 222 of the 508 new staff are drivers.

Do those numbers account for the lower capacity of low floor vehicles? How much of it is due to suburban service increases (if any)? How many are new hires like mechanics or other staff to support higher maintenance requirements of the low floor and hybrid fleet?

Those cost per ride numbers look like fares and I get the feeling you cherry picked those numbers to grind your axe as if there were no external factors that would cause fares to increase faster than inflation.
 
In 1998 the TTC averaged an operating cost of $1.15 per ride. Indexed to inflation that would be equivalent to $1.84 today. In 2009 the cost per ride average is $2.75, 49% above inflation.


From Posted Toronto;

The Toronto Transit Commission will transport roughly the same number of people this year as it did 20 years ago. But with 25% more staff.

In 1988, 9,963 TTC staff transported 464 million people. In 2009, 12,411 TTC staff will transport 473 million people. That’s 2,448 more staff to move 2% more people.

The TTC, once the poster child of an efficient transit service, is becoming the thing that its former lean-and-mean leader, David Gunn, hated the most: a bloated bureaucracy. The TTC this year is continuing a spending and hiring bonanza: spending is up 10.4% and the TTC is hiring 508 new staff.

TTC brass will protest: We’re adding service! True, except that just 222 of the 508 new staff are drivers.

I work for the federal government and before that for the city of Montreal.

Every Public gov. are doing the SAME thing...
Work better with what you have to become more productive and efficient...

Something that the City of Toronto and the TTC are not doing...

So I think it is a legitimate question to ask. Competent or not?
 

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