OC TRANSPO IN THE RED
$6.8M deficit projected
Can OC Transpo customers come to the rescue of the transit agency’s budget in 2019?
Transpo is on track to post a $6.8-million deficit in 2019, according to a report published days before the city makes the historic change to a public transit system backboned by the LRT.
The financial report summing up the first half of 2019 and forecasting the next six months says the transit agency has been spending more money to meet Para Transpo demand and on overtime costs to cover vacant positions.
The report also says fare revenue has been lower, and probably for good reason: Fares were budgeted to increase in July, but won’t actually increase until October. Council decided to hold off on a 2.5-per-cent fare increase until after the opening of the LRT, welcoming its first paying customers this weekend.
The $2.1-billion Confederation Line will open this Saturday at 2 p.m. The LRT system is 12.5 kilometres, running between Tunney’s Pasture and Blair stations via a 2.5-kilometre downtown tunnel.
Overall, expenses for conventional transit and Para Transpo are heading toward a $3.6-million deficit at the end of the year, while revenue is expected to be short by about $3.1 million.
As of June 30, Transpo had a $2.4-million deficit thanks to $587,000 in extra expenses and about $1.8 million attributed to a revenue shortfall.
The projected deficit is tiny compared to Transpo’s 2019 budget, which has $610 million in council-approved spending.
Still, the city will need to find the money at the end of the year if the projections hold.
Departmental deficits and surpluses are reviewed at the end of each year and the city uses surpluses to offset deficits before dipping into the reserves.
Transpo has been feeling pressure in several areas, from trying to maintain a bus service during traffic detours to preparing for the switch to LRT to improving service for customers in need of accessible transit.
Para Transpo customers have been demanding better service, especially when it comes to the wait times for ordering rides.
As for overtime for drivers, Transpo has been trying to keep the bus system functioning respectably through the delay in opening the LRT system. Since Transpo is shedding some bus operator positions following the switch to LRT, it made more sense for the transit agency to offer overtime hours rather than to hire new operators.
Of the annual overtime budget of $21.9 million, $19.7 million or 90 per cent, was already spent at mid-year, the report said.
Lower average fares make it challenging for Transpo staff to predict how much revenue will come into the agency. Transpo has noticed people making more strategic use of Presto cards, choosing to use the e-purse for single rides rather than monthly passes. For example, deducting money from the e-purse might be financially advantageous for people who only use the transit system during a five-day work week.
The city will also try to recover lost fare revenue from the extra three-month fare freeze. It believes the Rideau Transit Group is contractually obligated to cover those costs because of the delay in completing the LRT project, and the lost fare revenue is part of a larger claim the city is making.
The financial report published Monday offered high-level details about Transpo’s operations at the halfway mark of 2019. There was no indication of what ridership numbers were like compared to previous periods.
Transpo hopes to see ridership growth attributed to the LRT, although it’s hard for the transit agency to put hard numbers to the projection since it will be a new experience for customers and Transpo itself.
Meanwhile, the city plans to raise the transit levy on property tax bills by 6.4 per cent in 2020, but it will keep the transit fare increase to 2.5 per cent.
More details about the 2019 budget could come during a transit commission meeting on Sept. 18. jwilling@postmedia.com twitter.com/JonathanWilling