OC Transpo facing fare revenue losses of $35 million in 2024: finance report
Joanne Laucius, Ottawa Citizen
Published Aug 28, 2023 • Last updated 3 hours ago • 4 minute read
City staff are recommending that city council keep Ottawa’s transit levy increase to no more than 2.5 per cent next year as OC Transpo faces $35 million in lost revenue because of Ottawans’ changing work patterns.
The city’s transit network is the “greatest financial challenge of all city services” in 2024, according to a budget report to be tabled Sept. 5 at the finance and corporate services committee. A 2.5 per cent tax levy increase is the targeted increase, in line with the 2023 increase.
OC Transpo continues to face financial pressures, including changing ridership needs and introducing new services, including O-Train Lines 2 and 4.
“Ridership and fare revenue continue to be lower post-pandemic because many downtown office workers are working from home or are working a hybrid schedule,” said the report.
“In 2024, this is expected to result in lost fare revenue of approximately $35 million.”
OC Transpo is also facing a $39 million deficit in this year’s budget. From 2020 to 2022, the federal and provincial governments provided funding to the city to replace lost fare revenue and additional operating costs resulting from the pandemic. The 2023 transit budget anticipated $39 million from the provincial and federal government, but the money has not been announced.
If those funds are no longer available, there will be no offset available next year for the losses in fares, said the report, which assumes that grants from senior levels of government will not fully continue into 2024.
“I have been using a lot of adjectives like ‘difficult’ and ‘challenging’. We know we have entered this year with a projected deficit,” said transit commission chair Glen Gower.
“This report tries to set the stage. I think it paints an honest, transparent picture of where we stand.”
In 2024, OC Transpo will also assume new costs from the operation of the new O-Train Lines 2 and 4, expected to open later this year, along with the cost of inflation, contract settlements and increases in contractual commitments, according to the report.
There will also be additional revenue in 2024, including about $21 million from property taxes from assessment growth and property tax and transit fare revenue increases of 2.5 per cent. The urban transit area has also been expanded to include land that was added to the city’s urban area.
A service review is underway to reduce spending in 2024, including a review to align bus routes to current ridership levels and patterns.
In addition, OC Transpo announced an on-demand bus pilot project in June, but has not named where the project will roll out.
The call-a-bus service will begin on weekends late this fall and will make use of idle Para Transpo vans to be used in areas of the city that either don’t have bus service or where there are bus routes with light passenger loads. The service has been described as similar to Uber, but it will be limited to specific areas and would be used to bring riders to an existing transit hub.
More details are expected to be presented to the transit commission on Sept. 18, said Gower.
Reductions in payments to rail contractors in 2024 are also on the table. Gower points out, for example, that when Line 1 returned to service on Aug. 7, it was with single-car rail vehicles as opposed to two cars.
It’s not certain how long this will last, but it could be a point for negotiations with the Rideau Transit Group, which maintains the rail system, he said. Another possibility to trim payments to rail contractors could be running single-car trains on the weekend.
The report also suggests a “realignment” of staffing in administrative, communications and technical areas, and examining alternative ways to provide some operational services.
City staff are continuing to review 2024 financial pressures and will make recommendations to city council and the transit commission in the 2024 budget presentation in November.
With a tax increase of 2.5 per cent, an urban property assessed at $415,000 will be paying $4,293 in taxes, an increase of $105. Rural homeowners with a home assessed at $415,000 will be paying $3,450, or $86 more.
Some transit measures were not specifically mentioned in the report. Although a 2.5 per cent increase in fares for most transit users is assumed, it’s unclear if that includes low-income riders, whose fares have been frozen since before the pandemic, said Gower.
Another unknown is ridership. In June, a report to the transit commission said bus ridership was about 75 per cent of the pre-pandemic level. O-Train ridership was at 43 per cent of pre-pandemic levels.
But ridership has been recovering, said Gower. “We have been seeing a lot of routes recovering very quickly.”
It’s one thing to run a deficit for a year or two, which can be covered with reserves or postponing capital projects, he said. “You can’t do that year after year.”
https://ottawacitizen.com/news/local-new...ses-of-35-million-in-2024-finance-report
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Why not just offer a larger discount for paying with a Presto ePurse? The current 5¢ discount is a joke, and now that you can pay with a credit card, hardly worth the cost of buying a Presto card (you need take transit 80 times to cover the $4 fee). Back when there were tickets, the ticket discount was much more substantial. I suspect the problem is that Presto costs OC Transpo a lot more money than the old ticket system did.
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