Chief General Manager’s Report Periods 1 and 2 January 1 To March 3, 2007
Meeting Date: April 18, 2007
Subject: Chief General Manager’s Report Periods 1&2 January 1 To March 3, 2007
It is recommended that the Commission forward a copy of this report to each City of Toronto Councillor for information noting that the detailed CGM’s Report is available upon request from the Office of the General Secretary of the Commission.
For years, the Commission has received on a monthly basis a public reporting on the TTC’s on-going activities, entitled the Chief General Manager Report. The purpose of this report is to provide the Commission with a look at the activities of the Toronto Transit Commission over the course of the year. Commencing with the first CGM Report for 2007, staff have reformatted the report to provide the Commission and the public with a less technically detailed report that hopefully will prove to be a more reader–friendly version. The detailed technical report which contains a significant amount of management-level internal reporting will still be produced, but will be available upon request from the General Secretary’s Office.
Ridership results and projections will be provided along with some economic analysis of those results. Summary-level financial information will be provided for each of the Commission’s budgets: the 2007 TTC Operating Budget, the 2007 TTC Capital Budget and the 2007 Wheel-Trans Operating Budget. Year-to-date and projected year-end results (projected actuals) will be included, complete with explanations for major variances. Details on activities for major capital projects will be provided, as will any formal changes to the TTC’s budgets that receive in-year Commission approval. In addition, various service-related factors will be discussed, such as service quality, cleanliness and customer satisfaction. Over the course of the year, additional information will be included for any items that become topical. For example, this inaugural report contains commentary on the current approval status of the TTC’s budgets as they work their way through the City’s budget approval process.
Budget Approval Status
City of Toronto Council approved the 2007 Capital Budget on March 7, 2007 in the amount $717.3 million, as shown in Appendix B.
As part of the annual City budget approval process, City Council approves an amount as its transit operating subsidy to the TTC. Based on the 2007 TTC Operating Budget approved by the Commission on January 31, 2007, the TTC would need an operating subsidy of $277.8 million to balance the 2007 budget without having to resorting to a fare increase. As can be seen from the attached Appendix D (which provides the recommendations from the City Manager and the City’s CFO regarding the TTC 2007 operating budget), the City Budget Committee is recommending a 2007 operating subsidy of $271.8 million, $6 million less than the Commission’s request. The implications of this are threefold. Firstly, there will be sufficient funding to hire only 11 of the 33 Special Constables approved by the Commission. Secondly, the TTC is being requested to absorb a $5 million unspecified reduction. Finally and most importantly, the TTC will not be increasing fares in 2007.
Funding for the 2007 Wheel-Trans Budget equal to that requested by the Commission is being recommended by the City Budget Committee for approval by City Council.
The operating budgets are scheduled to be approved by City of Toronto Council at its meeting commencing April 20, 2007.
For the first two months of 2007, ridership has been strong: almost 1% or 800,000 higher than budget and 2.8% or 2.1 million over the same period last year. Most of that growth occurred in February when ridership was 4.4% over last year and 2.6% over budget. A strong economy and enormous growth in Metropass sales are the key contributing factors. Based on these early results, ridership levels exceeding the budget should probably be expected, although it’s too early to establish a figure. The year-end ridership projections contained in this report are unchanged from the budget of 454 million passengers. Ridership will be monitored continuously over the course of the year and adjustments to the projections will be made accordingly.
As has been discussed in numerous TTC budget presentations, employment and in particular downtown employment, is one of the leading causes of ridership growth. City of Toronto employment in February was 1.5% higher than last year and the downtown Toronto office vacancy rate in the fourth quarter of 2006 was 14% lower than in the same period of 2005. In addition, while it’s not the prime tourist season, hotel occupancy rates in February were 6.3% better than last year and the number of passengers through Pearson International Airport was up by 3%. This is a strong economic start to the year.
In addition to the strong economy, Metropass sales continue to soar. February pass sales were 24% over last February. Several factors help to explain this: (i) holding the price under $100 for each of the past 2 years, despite the price of diesel fuel almost doubling and other inflationary increases in TTC operating expenses, (ii) the continued high price of gasoline, (iii) the introduction of the Metropass transferability feature in 2005 and (iv) the introduction of the federal tax credit this year for transit pass users. There is no reason to expect these record levels of Metropass sales to weaken any time soon.
The results of the recent Federal and Provincial Budgets have been factored into the financial tables shown in Appendices A, B and C.
TTC 2007 Operating Budget
Appendix A provides the TTC’s Income Statement and gives information on Revenues, Expenses and Subsidies. The last row in the chart shown provides a projection of the expected year-end budget shortfall or surplus. The chart includes the Commission’s requested subsidy of $277.8 million as the budgeted subsidy level and will be amended once City Council approves its 2007 operating subsidy level for the TTC. The only two significant items to note are: (1) year-end expenses are projected to be about $1 million over budget because about half of the new tokens that were originally expected to be delivered in 2006 were actually delivered in 2007 and (2) passenger revenues for the first two months were $1.5 million below budget, despite the strong ridership results. While the 24% increase in February Metropass sales is a good thing because it represents a substantial growth in sales for the most committed transit users, it has come at the expense of a drop in cash ridership (19%) and ticket/token usage (9%). At the end of February, ridership is 1% above budget, but revenue is about 1% below. This trend will be closely watched over the course of the year and reported on in subsequent CGM reports.
TTC 2007 Capital Budget
Appendix B contains a table that shows actual expenditures and year-end projections for the TTC’s capital projects. While the City approved an overall budget of $717.3 million, this was based on gross expenditures of $769.5 million and an unspecified under spending allowance of about $52.2 million. Since the time the budget was prepared in the fall, expenditures netting out at $18 million have slipped from 2006 to 2007. Consequently, the TTC will need to under spend the capital budget (excluding bus purchases and payments on the order for new subway trains) by about 15% to meet the overall capital funding level approved by the City. These results will be continuously monitored over the course of the year and will be reported on in each CGM report.
Information on the status of funding for the capital budget is contained in the Capital Funding Status Update report also being submitted to the April 18, 2007 Commission meeting. In addition, staff will be working with the City and Federal government on the required Contribution Agreement for the federal funds recently announced for the Spadina Subway Extension.
2007 Wheel-Trans Operating Budget
Appendix C shows the Wheel-Trans Income Statement. At the present time, both year-to-date and year-end projections are virtually on budget.
Service Related Results
As was discussed in great detail during the budget process, there are numerous surface routes within the TTC that are currently running with crowding in excess of the approved standards. The Commission will be unable to correct for this until the fall of this year. The TTC is in the midst of record retirement levels for operators that will persist for several years to come. Just as the huge expansion of the system in the 1970s and 1980s has translated into record capital expenditure levels to replace the transit vehicles that were purchased during that period that have reached the end of their useful life, the transit operators hired to drive those vehicles are reaching retirement age. They too must be replaced. Coupling this with the current system expansion to meet increased ridership levels has placed an enormous strain on the TTC’s ability to hire and train enough operators to meet the current demand. In addition, the size of the bus and streetcar fleet limits the TTC’s ability to add extra rush hour service. The existing bus orders provide for an additional 100 buses to be delivered in the fall to allow for the continuation of the Ridership Growth Strategy, which calls for improved rush hour service. That timing coincides with the new driver hiring and training plans and the opening of the new Mount Dennis bus garage needed to house these buses. The current overcrowding levels should be alleviated by the October and November board periods.
The performance of bus and streetcar routes was varied over the first two months this year. Mainly due to the mild weather in January, these routes largely performed as expected. However, the weather in the period ending March 3 resulted in declined performance. In particular, the severe ice storm on March 1 not only affected service that day, but it resulted in many road closures and delays on March 2 due to downed hydro wires and fallen trees. As a result, surface service achieved only a 68% on schedule levels (within 3 minutes of scheduled headways), compared to the target of 75%. The current overcrowding and traffic congestions levels make this a challenging target to achieve.
The subway and the SRT mainly performed as expected during the first two months. Overall service performance levels for the Bloor-Danforth Line were below target for February mainly due to the weekend rerouting required because of the construction work near the Park Hyatt hotel.
Information on this can be found in the Cleanliness Audit Report also being submitted to the April 18, 2007 Commission meeting. Future CGM Reports will provide information on progress towards improving the cleanliness of the TTC system.
Customer Satisfaction Results
Interestingly enough, while there has been a 25% increase in complaints thus far this year, there has also been a 29% increase in compliments over the same time period. The biggest increases in complaints have been in the areas of surface delays, bypassing of patrons and failure to wait categories. In addition, discourtesy complaints have also increased. All of these complaint increases are consistent with the current overcrowding conditions on surface vehicles and the worsening traffic congestion conditions prevalent in the city.