TTC: Budgeting, Fares and Financials

[TheTigerMaster]

We have no thread for the TTC budget. I think it's about time one was started, since budgeting is critical to everything the TTC does.

Edit: Amended the title to include discussion on TTC fares. Any discussion on fare system (e.g. fare-by-distance vs. flat rate and fare prices) should go here. Presto implementation discussion should remain in the Presto thread.

Let's start off with the Preliminary TTC 2016 Operating Budget-Steve Munro.

Mayor John Tory had requested a 2% reduction in the TTC budget for 2016. The preliminary 2016 budget has come back with a $99 Million requested increase in the subsidy. That's an increase of 21%:

The preliminary operating budget will require $99 million more in subsidy (before any fare increase) than in 2015, an increase of almost 21% that is bound to drive the budget hawks on Council mad.

This is the inevitable budget arithmetic:Expenses go up because there are more riders

• Expenses go up because there are more riders
• Expenses go up because the quality of service has been improved
• Expenses go up because of inflation

These three items compound into a year-over-year value that is not the simple inflationary increase of a few percent many on Council hope to see, and certainly not the 2% reduction asked for by Mayor Tory.

If Council gives the TTC 2% more subsidy for 2016, this would be $9.48 million, but nowhere near the $99 million they need. Equally, if Council were to cut the subsidy by 2%, it would decline by the same amount leaving an even bigger hole for the TTC to fill.

The fare revenue increase shown above is the combined effect of more riders in 2016, but riding at a slightly decreased average fare because of the uptake of Metropasses as the preferred payment method. Supposing that the TTC were left with $90 million to find (after a $10 million bump from the City), this would require a 7.8% fare increase (with no allowance for lost ridership). A lower fare increase requires a higher subsidy, or a decision to roll back some of the service improvements that are only now at the announcement stage, not even yet on the streets.

 

[W. K. Lis]

This is where an operating subsidy from the federal government (it being a federal election year, that something the political parties should include in their platforms) and the provincial government (which still hasn't been put back since the Harris years), maybe of benefit to the TTC.

 

[Amare]

Nice idea on starting this kind of thread Tiger. It will be good for people to learn more about the financial situation of the TTC, and how the operating/capital budgets are used.

The $100 million in additional annual funding is a bit of a surprise, but what exactly did Tory and Co. expect with all the service improvements that they've been announcing. Do they think running additional buses come at a free price tag? Every additional rider the TTC absorbs drives up operational costs, and as the city continues to grow so to will the number of riders. It's math 101, and if the City doesn't like it than its time to pressure upper levels of government for more funding. The City can only put so much money into the yearly increased cost, and eventually it will reach a point where cuts will have to be made if upper levels of government reduce their funding.

 

[TheTigerMaster]

This is where an operating subsidy from the federal government (it being a federal election year, that something the political parties should include in their platforms) and the provincial government (which still hasn't been put back since the Harris years), maybe of benefit to the TTC.

It's about time the Toronto quit passing the buck. Our property taxes has decreased every year for the past 13 years and is among the lowest in the GTA. I wouldn't mind a modest increase in property taxes to pay for transit operations.

We won't see any benefits from this election year until at least the 2017 TTC operating budget, since the federal budget is set before the TTC budget, correct?

 

[TheTigerMaster]

I amended the title to include discussion on TTC fares. Any discussion on fare system (e.g. fare-by-distance vs. flat rate and fare prices) should go here. Presto implementation discussion should remain in the Presto thread. Fares are 95% of TTC income, so it's a natural fit for this thread.

 

[doady]

The TTC used to be profitable but then it expanded into the suburbs and started losing money. The suburbs are the real reason TTC has to be subsidized so much. So the obvious solution is raise fares in the suburbs until all the suburban bus routed achieve 100% cost recovery. The suburban routes are around 50% now (compared to 71% for the entire system as a whole), so if the suburban fares were increased to around $6.00 per trip to represent the true cost of providing the service, it would mean 100% cost recovery for the suburban TTC service, and that would mean 100% cost recovery for all the TTC. It is a simple thing to do, and it would virtually eliminate the need for subsidizing the TTC by the city. The city as a whole would save hundreds of millions of dollars each year.

 

[TheTigerMaster]

I'd much rather pay extra on property taxes than make people in the inner suburbs pay $6 per fare or something ridiculous like that. Mostly for social equity reasons that have been discussed to death.

 

[W. K. Lis]

Does anyone know how many MetroPasses are sold each year? There is federal transit pass tax credit of 15%, which goes to the MetroPass user (allegedly), which "reduces" the price of the MetroPass (delayed to the following year, unfortunately).

 

[TheTigerMaster]

Back in January, Tory announced a $95 million increase in funding for free fares for children and expanded bus service https://www.ttc.ca/News/2015/January/19012015NR.jsp

How does this factor into the budget? I'm confused because the TTC wants another $99 Million to improve services. Are these improvements beyond what has been previously announced back in January?

I'm also a little confused about how Tory is simultaneously asking for a 2% funding cut and promising $95 Million for those service improvements announced in January.

 

[Amare]

The TTC used to be profitable but then it expanded into the suburbs and started losing money. The suburbs are the real reason TTC has to be subsidized so much. So the obvious solution is raise fares in the suburbs until all the suburban bus routed achieve 100% cost recovery. The suburban routes are around 50% now (compared to 71% for the entire system as a whole), so if the suburban fares were increased to around $6.00 per trip to represent the true cost of providing the service, it would mean 100% cost recovery for the suburban TTC service, and that would mean 100% cost recovery for all the TTC. It is a simple thing to do, and it would virtually eliminate the need for subsidizing the TTC by the city. The city as a whole would save hundreds of millions of dollars each year.

I'm sorry but that's not the way public transit works. This is not the private sector here, where they would be looking to make a profit at every possible chance. The only way they would ever "break-even" is by charging astronomical prices (which you have alluded to) but most riders would not be able to afford that. This is part of the reason why the city subsidizes part of the cost of using transit.

Now in terms of routes that are poor performing, that is part of the nature of running a transit system; some routes will be able to achieve full cost recovery or even a small "profit" per se, and that indirectly offsets some of the costs of those poor performing routes. Toronto does exceptionally well in terms of fare/cost recovery for the system as a whole, the problem that we have is that we constantly choose to build monolithic cost wasting projects that add substantially to the costs of running the system (the most obvious of which is the Sheppard subway). Soon we'll have the Vaughan subway, and potential RH subway which will add to the costs.

It's ironic that politicians complain we dont have money to fund the TTC, when these are the exact same people who go and support building subways to the middle of nowhere and exasperate the vicious circle.

 

[salsa]

The TTC used to be profitable but then it expanded into the suburbs and started losing money. The suburbs are the real reason TTC has to be subsidized so much. So the obvious solution is raise fares in the suburbs until all the suburban bus routed achieve 100% cost recovery. The suburban routes are around 50% now (compared to 71% for the entire system as a whole), so if the suburban fares were increased to around $6.00 per trip to represent the true cost of providing the service, it would mean 100% cost recovery for the suburban TTC service, and that would mean 100% cost recovery for all the TTC. It is a simple thing to do, and it would virtually eliminate the need for subsidizing the TTC by the city. The city as a whole would save hundreds of millions of dollars each year.

1. How would that pay for big ticket capital costs?
2. Lets set YRT and Mississauga fares to $15.00. Sound good?

 

[W. K. Lis]

From this link for subsidies that transit agencies get:

According to the TTC’s 2014 budget highlights, the subsidy the TTC receives remains the lowest in North America at just $0.78 per ride.

The subsidy other municipalities get:

• Montreal – $1.16
• Vancouver – $1.62
• Chicago – $1.68
• New York City – $1.03
• Mississauga – $2.21
• York Region – $4.49

So I would add the subsidy to the current fare to see what the "real" fare should be.

Other references, you may examine, is the Fare Box Recovery Ratio information at this link.

(Must not forget, that the gasoline tax, which hasn't risen due to inflation since January 1, 1992, does not pay entirely for provincial roads, they have get funds from the provincial general revenue to cover the costs for the province. For the cities, it is the property taxes that pay for the costs to maintain and build roads in the cities, which include the Gardiner & the Don Valley.)

 

[DSC]

To try to 'frame' the discussion we may want to remember that this Report is coming to the October 2015 TTC Board meeting.

The Board approved the following motions:


That the CEO report back to the TTC Board by June 22, 2015 (NOW AT OCTOBER 28 meeting) in a briefing note on the feasibility of a six-month pilot program to reduce fare costs during off-peak hours to $1.00 for seniors.

That staff be requested to report back, as planned, and in consultation with city fare equity staff, in October for a fulsome discussion on fare policy when PRESTO is in place and for when we remove legacy fare media (tokens etc.) and what the future for cash payments are including consideration of various fare options including:

i) fare by time of day

ii) 2 hour transfer

iii) Seniors fares by time of day, including $1 senior fares during off-peak hours

iv) Fare by distance

v) Concession policy overall as informed by Fare Equity Strategy

vi) Monthly pass versus daily/weekly/monthly capping

vii) Free regular transit fares for Wheel-Trans qualified passengers in addition to the visually impaired.

That staff continue discussion on a 2-hour transfer, with PRESTO and Metrolinx, to understand how that could be funded via savings in the PRESTO programme and in support of more regional fare integration.

Referred to Chief Customer Officer

It seems to deal with most fare issues and will be a very important Report if it is done properly and should lead to a 'spirited' discussion!

 

[dowlingm]

Looking for operating cash from the Feds is a mugs game. It spreads their attention too thinly not to mention the debates that would cause over how much large vs small systems would get, how much service is appropriate etc. A structured application-led programme of federal capital investment like the U.S. TIGER is what I'd look for to replace the current awful surprise cheque drops on projects like the Scarborough subway because it meets political needs.

 

[doady]

1. How would that pay for big ticket capital costs?
2. Lets set YRT and Mississauga fares to $15.00. Sound good?

1. If the city stopped subsidizing the suburbs, there would be more money for projects that are actually needed.
2. Mississauga's cost recovery is 47%, so only only around $7.00 fare would be needed. But that is a different. That is not bad. That is Mississauga subsidizing Mississauga, not like Toronto subsidizing Scarborough. If Scarborough wants subsidized transit, they should have their own transit system separate from TTC and subsidize it themselves instead of mooching off of Toronto.

From this link for subsidies that transit agencies get:

According to the TTC’s 2014 budget highlights, the subsidy the TTC receives remains the lowest in North America at just $0.78 per ride.

The subsidy other municipalities get:

• Montreal – $1.16
• Vancouver – $1.62
• Chicago – $1.68
• New York City – $1.03
• Mississauga – $2.21
• York Region – $4.49

So I would add the subsidy to the current fare to see what the "real" fare should be.

That is subsidy per boarding. TTC has extremely inflated boardings because of transfers at Kennedy station, etc. Any large system will have lower subsidy per boarding just for the simple fact that the larger the system, the more likely transfer is required to complete a trip. More transfers = lower subsidy per boarding.

Is Mississauga two times as inefficient as Montreal? No, Mississauga's cost recovery ratio is 47% compared with Montreal's 57%.

Is Mississauga 1.4 times as inefficient as Chicago? No in fact the CTA has lower recovery (43%) than MiWay.