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Amended 2012 TTC budget

Amended 2012 TTC budget

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Published by Gillian Grace
The 2012 TTC budget
The 2012 TTC budget

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Published by: Gillian Grace on Sep 13, 2011
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09/13/2011

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Form Revised: February 2005
TORONTO TRANSIT COMMISSION
 
REPORT NO.
 
MEETING DATE
: September 16, 2011
SUBJECT
: AMENDED 2012 TTC AND WHEEL-TRANS OPERATINGBUDGETS
ACTION ITEM:REASON FOR CONFIDENTIAL INFORMATION:
This report contains information about labour relations or employee negotiations
 
RECOMMENDATIONS
 It is recommended that the Commission:1)
 
Approve the amended 2012 TTC and Wheel-Trans Operating Budgets asoutlined in this report, noting that:
 
The $85 and $16 million shortfalls (a total of $101 million) included inthe preliminary 2012 TTC and Wheel-Trans Operating budgetsrespectively, have been reduced significantly to $21 and $8 million (atotal of $29 million) through a series of measures including expenditurereductions, staff reductions and, adjustments to service loadingstandards;
 
Subject to further budget discussions and a review of all core, efficiencyand user fee recommendations, staff recommend Commission support, inprinciple, for a 10 cent fare increase, which if implemented January 1,2012, would generate approximately $30 million in 2012 to address theremaining shortfall, noting that the formal recommendation on a fareincrease will be presented to the Commission in December following theresults of the City’s Core Service and Service Efficiency Reviews;
 
Staff has commenced activity to pursue contracting out opportunities;2)
 
Approve the recommendations contained in the confidential attachment, notingthat this information will remain confidential until such time as all therecommendations and related matters are completed to the satisfaction of theTTC General Counsel;3)
 
Approve the development of a multi-year fare, service, subsidy strategy inconjunction with the City of Toronto, taking into consideration appropriatetargets for ridership levels, service initiatives and revenue/cost ratios;
 
AMENDED 2012 TTC AND WHEEL-TRANSOPERATING BUDGETS
 
Page 2
4)
 
Forward this report to the City of Toronto Budget Committee for confirmation ofthe 2012 Transit Operating subsidies for the TTC and Wheel-Trans;5)
 
Forward this report to the Ontario Minister of Transportation, the OntarioMinister of Energy and Infrastructure, and the Ontario Minister of Finance, forinformation;6)
 
Forward this report to the Federal Minister of Transport, Infrastructure andCommunities, for information, and;7)
 
Forward this report to Metrolinx for information.
BUDGET CONTEXT 
The City of Toronto is facing a $774 million operating budget pressure in 2012. Toaddress this challenge, Council approved the implementation of a Service Review Programconsisting of a Core Service Review, Service Efficiency Review and a Comprehensive UserFee Review. These reviews are expected to generate cost savings to help mitigate the2012 operating pressure and, in the longer term, to contribute toward resolving the City’sdeficit.It is anticipated that the results of the Service Review Program initiative will be known thisFall. Results are to be integrated into the 2012 Operating Budgets after Council decisionsin September at which time final direction and guidelines will be provided. In the interim,TTC staff has continued to review and refine 2012 budget estimates and projections andto explore all possible mechanisms to eliminate the operating shortfalls identified in thepreliminary budgets approved by the Commission on June 8, 2011.
BUDGET HIGHLIGHTS
Details of the preliminary 2012 TTC Operating Budget and preliminary 2012 Wheel-TransOperating Budget are provided in the reports presented to and approved at the June 8,2011 Commission meeting. These reports are attached as Appendix A and B to this reportfor reference purposes. The following table summarizes the key financial aspects of thepreliminary budgets (all figures are in millions):(Millions)
TTC
 
WHEEL-TRANS
Ridership 502 3.15Expenditures $1,507 $103.6Revenues 1,039 5.62011 Subsidy 429
 
91.1
 
Shortfall $39 $6.9City Subsidy Reduction 46
 
9.1
 
Total Shortfall $85
 
$16.0
 
 
AMENDED 2012 TTC AND WHEEL-TRANSOPERATING BUDGETS
 
Page 3
The preceding table shows that, after factoring in the projected City of Toronto operatingsubsidy for the TTC and Wheel-Trans, these budgets will have a shortfall of $85 millionand $16 million, respectively.There are essentially three approaches available to address these shortfalls: (1) reduceexpenditures, including determining the appropriate service level, (2) increase subsidies,and (3) increase fares. Since the approval of the budgets by the Commission in June, staffhas continued to work on a shortfall reduction strategy. This included reviewing expensesand assessing how to be more efficient and contain costs. This challenge is greater thanever before as it is expected that ridership will be in excess of 500 million in 2012: thefifth consecutive year of record ridership levels. In fact, based on a more recentassessment of ridership trends, the ridership projection for 2012 has been increased to503 million; however, as the majority of this increase relates to more trips by Metropassholders in the off-peak, there is no net increase in revenue. Ridership and passengerrevenue estimates will be updated as additional TTC information and economic forecastsbecome available.Ridership is budgeted at an all-time record high of 503 million rides. This represents anincrease of 16 million annual rides over the 2011 budget of 487 million. At a time ofrecord ridership and ever-increasing demands for enhanced customer service, considerationfor increasing resources to meet those needs would normally be given. However, whenfaced with a 10% reduction in subsidy for both the TTC and Wheel-Trans OperatingBudgets, trade-offs have to be made. The following list of budget amendments includesitems that otherwise might not be contemplated with the record ridership levels beingcarried by the TTC and Wheel-Trans plus items where estimates have been revised.Diesel Fuel: $15 million reduction As noted in the preliminary 2012 TTC Operating Budget approved by the Commission onJune 8, 2011, the single largest increase in the expense budget was for diesel fuel. Thepreliminary budget was based on the City of Toronto’s budget guideline for a 35% priceincrease over the current average budgeted prices. After monitoring 2012 futures pricesover the past several months, it is evident that these prices have fallen below the originallyprojected level and it is proposed that the 2012 budget requirement be reducedaccordingly.Staff Reductions: $14 million reductionIn addition to the 60 positions already reduced in the preliminary budget approved on June8, 2011, a comprehensive review of all workforce positions has identified a further 152positions, for a total of 212 reductions in the 2012 TTC Operating Budget, with associatedlabour and benefits expenses reductions in the order of $14 million in 2012 and $16million on an annual basis. Additionally, 99 positions are proposed to be reduced in theCapital, Toronto Coach Terminal and Wheel-Trans budgets. Total workforce reductionsamount to 311 positions. Further details are included in the associated ConfidentialAttachment.

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