The chair of the Transit Commission says Ottawa is joining other cities in a “full-on” press for transit funding from upper levels of government, as OC Transpo faces ridership challenges and multimillion-dollar deficits.
A report for the Sept. 5 finance and corporate services committee meeting warns OC Transpo is facing “the greatest financial challenge” of all city services next year, with a projected $35 million shortfall in fare revenue in 2024. Staff are recommending a 2.5 per cent hike in transit fares and possible bus route cuts next year.
“We have a challenge, a big challenge, around our transit budget right now,” Transit Commission Chair Glen Gower says. “I think everyone knows that ridership is significantly down compared to pre-pandemic.”
Gower told Newstalk 580 CFRA’s CFRA Live with Andrew Pinsent on Sunday that OC Transpo service is funded through three sources of revenue: fares, the transit levy on property taxes and assessment growth from new homes and businesses.
“When you’re already starting with ridership at 75 per cent, that means you’re down a quarter in terms of one of the major revenue streams so it’s a big challenge,” Gower said, noting bus ridership is at 75 per cent of pre-pandemic levels.
“The other source of funding that every municipality in Ontario and across the country, they’re doing a full-on press to the provincial and federal governments to say, ‘Please, give us some financial assistance for our transit system,'” Gower said, noting the city of Toronto is facing a multimillion-dollar transit deficit due to lower ridership.
The Toronto Transit Commission was projecting a $336 million shortfall for 2023, according to a report in January.
“We will be a few years still before we’re recovering from the pandemic and we’re getting back to something like 100 per cent of pre-pandemic fare revenue,” Gower said.
“We’re continuing to press the provincial and federal governments to give us some funding to help make it through that funding gap. I don’t think anyone wants to reduce service; we all want to expand our transit service.”
OC Transpo is projecting a $39 million budget deficit in 2023 due to lower ridership as many people continue to work from home following the COVID-19 pandemic.
“We still have not had any confirmation from the province or the federal government,” Gower said, noting the city of Ottawa has specifically asked the upper levels of government to cover the 2023 operating budget deficit.
The committee report on budget directions for 2024 notes city staff are continuing the Service Review to “reduce spending” in 2024, including “alignment of bus routes to current ridership levels and patterns through the bus route review” and “reductions in payments to rail contractors” based on current ridership and conditions.
Gower insists there is “nowhere in the (staff) report where it says staff are considering cuts,” but concedes you could define route “optimization as a cut, but I think it’s more nuanced than that.”
“We’re going through this major route review. There are some routes where over the years there’s been extra milk runs added, little jogs here or there, that add 5, 6, 7 minutes to a trip. Those are things that we’re trying to identify; maybe they don’t make sense anymore and maybe those could be streamlined in a route so the route runs a little quicker,” Gower said.
“When you compound that over dozens of trips a day and over every month of the year, every day of the year, you can actually achieve some savings there in the operations and make it more efficient.”
Gower says he’s asked staff to look at some of the 200 series routes operating in Stittsville and ridership on the bus routes.
“There’s a couple of routes that overlap quite a bit, could we combine those somehow, maybe increase the frequency but have a more efficient way they’re routed based on where the current demand is.”
Gower says staff are also looking at the OC Transpo capital budget to see if there is “anything that can be deferred to a future year that can give us some savings.”
Coun. Sean Devine says talk of possible cuts or realigning bus routes to current ridership levels is “very concerning.”
“And can actually lead to the ‘death spiral’ faced by transit systems when service continues to degrade and diminish, losing more and more riders, which leads to yet more service cuts and fare hikes,” Devine said on X, the platform formerly known as Twitter.
“And so the unintended consequences of these actions may end up far more costly and far more devastating to the city as a whole, pushing more and more residents away from transit and back into cars, with all the costs that come with that.”
The 2024 transit budget will be presented to the Transit Commission and Council in November, including recommendations for possible alignments to services. Staff say the report will also outline the financial pressures for OC Transpo and a “description of the effects that any change would have on service for customers.”
The 2023 OC Transpo budget included a fare freeze, which cost $5 million, and extended free transit for kids to include children aged 8 to 12 starting July 1. OC Transpo’s operating budget is $706 million this year, according to city data.
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