Pandemic HSR fare freeze debated
A Hamilton transit fare freeze for the rest of the coronavirus pandemic is off the table — for now.
Councillors debated Nrinder Nann’s proposed freeze with a five-cent hike planned for September before she withdrew her motion during a budget session Friday.
Balancing transit’s budgetary needs with the economic hardships of riders during the pandemic is at the core of the issue, the Ward 3 councillor said.
Meanwhile, fare box revenue has “never been sufficient” to fund an “essential service like transit,” she said.
But with uncertainty over the future of provincial-federal pandemic relief funding and still time before September’s fare hike, Nann opted to hold off on her motion.
“Rightfully, we don’t want to make any hasty decisions.”
Forgoing 2021’s five-cent hike, which would take an adult fare to $2.55, would make for a $596,000 budget hit this year, staff noted.
But the accumulative impact of a freeze this year would amount to $7 million by 2026, according to multi-year budgeted ridership and revenue figures.
To keep council’s commitment to the 10-year transit strategy, which is in Year 5, that loss would have to come from elsewhere, either the tax levy or reserves, staff said.
But Coun. John-Paul Danko suggested a 10-cent hike in 2022 could make up for ground lost to a fare freeze this year.
Danko also suggested the fare freeze cost analysis should factor pandemic-specific ridership — it dropped by more than 45 per cent in 2020 compared to 2019 — not normal levels. The lost revenue would be “substantially less” than what’s projected in staff’s analysis.
It’s “critical” for the city to set spending plans according to “normal years” to secure federal-provincial Safe Restart funding, said Mike Zegarac, general manager of finance. That’s to “clearly demonstrate” the impact of the pandemic through differing budget and actual numbers.
Early in the pandemic, HSR halted front-door boarding for driver safety, which meant forgoing fare-box revenue — a loss picked up by COVID-relief funding. Last month, a staff report estimated the loss of revenue due to the dip in ridership in 2020 at $24.2 million.
But Zegarac said it’s not clear whether the province would reimburse the city for revenue lost to a council-decided fare freeze. “Quite frankly, it would be a guess.”
Federal-provincial Safe Restart funding has been allocated to cover defined periods of transit operations, starting with $17 million for April through September 2020.
But a Dec. 15 letter from Ontario Transportation Minister Caroline Mulroney that references a total allocation of $34.5 million only specifies that amount is for costs “incurred from Jan. 1, 2021” with no mention of an end date, Zegarac said in an interview.
“So whether that is until we exhaust the $34.5 million, I don’t know, and we’re seeking clarification.”
During Friday’s budget meeting, Coun. Lloyd Ferguson noted the proposed fare freeze was premature. The issue “may all be moot” if most are vaccinated against the virus come September.
Mayor Fred Eisenberger argued taxpayers will pay for the lost revenue one way or another, adding senior levels of government would take a “very dim view” of pandemic funds used to cover a fare freeze. “I think there’s more harm to be had than good.”
Danko contended the discussion was too wrapped up in how government might reimburse the city for losses incurred by a fare freeze. “The real question is what would we have to fund in order to support that.”