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Tuesday, January 11, 2011

A lean, mean transit machine

On Wednesday, members of the London Transit Commission will consider a staff report which provides options for meeting Council’s request to all boards and commissions to reduce their budgets so that a zero tax increase can be realized.


The LTC will be a little short-handed at this meeting. As a result of the careless tweeting of a newly-appointed commissioner who subsequently resigned, there will be only four commissioners remaining, Frank Berry (chair), Councillor Harold Usher (vice-chair), Councillor Sandy White, and Eric Southern, to consider what to recommend to Council. Two from Council, two from the public. Two with experience, two who are new to their positions. And a strong potential for tied votes. All of which will make this meeting a very interesting one.

The staff report itself highlights the dilemmas that will confront the commissioners and ultimately councillors.

During the election campaign, a number of contenders were convinced that a zero tax increase could be achieved without cutting services, that there was a lot of waste and fat in the system that could be cut and no one would notice the difference.

That’s a tough argument to make when it comes to our public transit service.

London has pretty much the most efficient, cost effective and advanced bus service of any city of its size (100,000 and up) in Ontario, excluding the two capital cities, Toronto and Ottawa.

Of the 16 municipalities, London, while ranking 7th in population at just over 350,000 in 2009, had the second highest ridership, nearly double the average. Our direct operating costs at $2.23 per rider were the lowest of the 16 and significantly below the average of $4.02. Even our specialized transit trips cost only half of the average of other communities.

Given this track record, one would expect a high level of investment in transit by our municipality. After all, more ridership saves us traffic congestion, wear and tear on the streets, and lowered costs in terms of street maintenance and road widening and all of the expenses and inconvenience they entail.

But no. London picks up less than 40 per cent of the operating costs, less than any of the other municipalities. The remainder is covered by fare revenues and provincial grants through the dedicated gas tax.

We have a mean, lean transit machine.

So what to do?

Should we increase fares?

Staff says no.

People ride the bus for a number of reasons: economic, environmental, convenience. But transit riders are not necessarily a captive market as we learned during the last transit strike. If transit becomes too difficult or too expensive, people find other ways of getting around or stay put. If past experience is anything to go by, a 10 per cent increase in fares would result in a 3 per cent reduction in ridership which in turn would reduce the efficiency of the service and the gas tax money from the province which is based on ridership.

What about cutting back staff or just not replacing them as they leave? Or reducing wages?

Staff has proposed a permanent reduction in wages for management, the second such in the past three years. That, together with some administrative material cuts could save $38,500 which means that the requested increase could be cut from 8.1 per cent to 7.9 per cent. It’s hard to cut the number of bus drivers without cutting service or increasing overtime costs. And London bus drivers, who just signed a three year contract last year, are in fact paid less than other those in neighbouring communities.

Here are the options that staff put on the table. None are without significant implications for our transit service.

1. Drop the planned service along to the West Beaverbrook community, an area of significant growth bounded by Wonderland on the east, Hyde Park on the west, Oxford Street on the south and Sarnia Road on the north. Not going ahead with this will reduce some costs but also the anticipated increased ridership, fare revenues and gas tax money. Not to mention some pretty annoyed residents of Ward 8 who paid their development charges and continue to pay their taxes.

2. Drop the recently introduced service to Lambeth and along Fanshawe West on the basis of last in-first out. I spent a lot of time in Lambeth during the campaign trying to assure the residents that London does care about Lambeth. This will not help. The Fanshawe West route is used by many young people to get to their jobs at the Power Centre from adjacent subdivisions and, of course, shoppers as well. It would also withdraw recent service improvements in the Byron area and much needed improvements to specialized transit services for persons with disabilities.

3. Delay opening the new satellite facility. This is possible only if we do 1 and 2 above first so that we can reduce the number of buses we require. There would still be some costs for maintaining the new facility. We would not be able to continue to take advantage of the provincial government funded bike racks installation program as that would put us significantly over capacity at the current location on Highbury.

4. Draw some one time money from the reserves which we have to deal with emergencies such as sharp increases in fuel prices. We may have enough of this cushion to do it once. It won’t work for subsequent years, however.

So these are the options facing the commissioners and councillors. Will they take them or will they recognize the value that residents and businesses of London get for their investment in transit?

In 2010 the main discussion about transit was how to make it more accessible to a larger number of residents. Most councillors recognized that a healthy transit system is integral to a vibrant, growing city that people want to live in and that business wants to locate in.

Our current system isn’t perfect but it’s better than most. We get good value for our money whether we ride the buses or whether we benefit from the reduced traffic congestion.

That’s why the previous council supported an 8.1 increase in funding. That’s why the current council should endorse it.

12 comments:

John McCullagh said...

Gina, most LTC riders may not be part of a "captive market" but nearly all of the disabled patrons of Paratransit are totally reliant on the service.

The demand continues to grow and is so beyond the supply that people are forced to schedule their lives around the demands of Paratransit.

The proposed growth of the service was minimal and far from sufficient, but at least it was a move in the right direction. Now if that is lost, we continue to neglect the disabled in our community.

Everything I read on this issue gives short shrift to the specialized services part of the equation. If people realize we are acheieving a zero tax increase on the backs of the disabled, maybe there'd be more outrage.

Stuart Clark said...

Excellent summary of the facts Gina. It will be interesting to see where those members of council can find those "superfluous things" to cut if there is not anything to cut other then service.

A good example on why a tax freeze across the board does not work.

Gina Barber said...

John,
Thanks for your observation. We need to be inclusive as well as efficient. "Staying put" is the only alternative for many who currently use the service. That's why some of us wanted to have more subsidy for those who are disadvantaged as a result of economic or personal challenges. Faint hope for that now.

Anonymous said...

Hi Gina

Good to find your Blog.

Cheers

Richard C. Wright

Ian said...

Where is the LTC at with their on bus camera proposal? If this has not been scrapped already it should be. The cost of implementing that alone will save a route or 2. It's quite a useless expense anyway as it won't deter violence against drivers yet merely make the offenders more easily caught and convicted. So if that's still on the table perhaps it should come off it?

What about the expense of their online real time mapping? How many people actually are using it? Shut it down and there's more savings right there. I personally cannot tell you of any bus riders that rely on that service. I'm a daily LTC user and do not use that at all.

Ian Gifford

Gina Barber said...

Good observations, Ian.

The security cameras are to be installed by the end of March. They will be paid for by a special federal/provincial program. It is hoped that they will aid in reducing insurance costs.

I don't know what the stats are for the online realtime mapping. It obviously takes time for people to adopt any new technology.

Anonymous said...

What if the LTC reduced fares would ridership and revenue increase?

Scott Collyer said...

Another capex consideration consideration ...

How about cutting back on the hybrid bus purchases ... that are 52% more expensive than regular diesel buses ($728.1k vs. $478k - using 2010 prices). By the simple fact we are investing in public transit, we are cutting GHG emissions. Green diesel technology and ultra low sulphur fuels are here now -- let's leverage that.

Lastly, if one looks at the LTC's capital plan, they were proposing the purchase of 11 replacement buses (at a planned cost of $5.8 million dollars at today's prices for each of FY 2011, 2012, and 2013.) Why not look at scaling that replacement programme back, and spreading over over an extra year or more to come up with the required savings (if it indeed is needed.)

In 2002, the weighted average fleet age of the LTC was 12.1 years. It currently sits at 7.5 years today. One can get to 1.7 million dollars in savings (with some cushion in the bank) by reverting to green diesel technology for all 2011 bus purchases ($500k in saving there) and deferring the purchase of three replacement buses until FY 2012 ($1.435M)

In the meantime, LTC can maintain service at current levels, and hopefully grow the farebox to the point where this problem does not manifest in 2012.

Scott.

Anonymous said...

not all disabled people are able to take a bus, even if it is a paratransit van...I for one have a bad neck and require a comfortable seat with a headrest and seltbelt or I end up with whiplash...again.

Sandy said...

Scott, while you make good points, cutting capital projects like bus purchases has little if any impact on the tax rate. While not clear from the city's budget documents, very little of a capital purchase comes from the capital levy (read, impact on the tax rate). The tax rate impact is in the operating budget which is driven (no pun intended) by staffing, most of which is either drivers or mechanics.

Scott Collyer said...

Perhaps Sandy, I need to have this explained to me as if I were a three-year old. :-)

When I look at the 2011 -2020 capital plan as set out here (http://www.ltconline.ca/agendas/072810vii1.pdf), of the 7.3$M or so in 2011 capex defined, it is funded as follows:

$1,756,300 Province of Ontario
$286,100 CoL development charges
$3,766,600 CoL
$1,500,000 CoL - directed portion of the federal gas tax transfer

And while one may argue how an opex versus capex dollar is treated from a budgeting perspective, more than 5.5$M ( or about 76%) of that allocated funding comes from the CoL (and ultimately the rate payer) in one form or another, and whether it is directly tied to the capital levy or not. To the rate and/or user fee payer, a capital dollar looks the same (and is just as shiny and spends just as well) as an operating expense dollar; and it's only further up the City finance food chain that we attach these definitions as we layer in transfers from other sources / levels of government. If deferring capital expenses means the downstream repurposing of budget dollars and the adjustment of other budget envelopes, then so be it. Let's do that heavy lifting. In the meantime, service-levels are frozen for a year, and hopefully marketing efforts can be undertaken to stimulate demand and revenues at the fare box to offset the inevitable pressures that will come in 2012-15.

Perhaps I am being overly cynical, but the 'script' as presented by staff to the commissioners last night was, for the most part, accepted at face value, and perhaps even amplified by some of the on-the-record comments made by certain commissioners (http://onlinelondon.ca/) I think the desired end result of this Mexican stand-off is the hope that CotW / Council blinks first. What happens if they don't? Cllrs Usher and White are but two votes of fifteen.

Scott.

Mike Bloxam said...

I think something that would help fund the LTC and make transit more accessible to people of all incomes would be to shift the concept of "fares" to the concept of a "transit levy" on property taxes. I realise this goes against Fontana's dream of 0% tax increase, but wouldn't it make sense to spread the cost of transit amongst residents, businesses, and institutions to allow everybody (residents and visitors to our fair city) to take a 'free' ride on the bus? Wouldn't that send an amazing message to people visiting London, not to mention its citizens?