Staff Report #3 – Provincial Funding Update

Staff Report #3

November 24, 2021

To All Commissioners

Re: Provincial Funding Update

Recommendation

That the report be NOTED and FILED.

Background

On November 4, 2021, the Provincial government provided their fall economic statement, which included an announcement with respect to public transit funding.

The announcement confirmed that the Province will provide $345 million in one-time funding, intended to address the financial impacts of both Provincial Gas Tax and operating revenue shortfalls due to the ongoing pandemic. The funding will be delivered in two ways as set out below:

• $120 million will be used to “top up” the Provincial Gas Tax fund for the upcoming year to be consistent with last year’s level; and
• $225 million will be issued through the existing Safe Restart Agreements to address actual financial impacts in Phase III up to December 31, 2021

With respect to the Provincial Gas Tax top up, this will provide for an allocation for 2021/22 that is consistent with budget expectations, and as such, will ensure that the extent to which Provincial Gas Tax was budgeted to be relied upon for both operating and capital will be maintained.

With respect to the Safe Restart Agreement top up for Phase III, given the current financial forecasts of London Transit’s Phase III Safe Restart funding, it is not anticipated that any top up will be required/available. Further details with respect to the Phase II funding and reporting are set out below.

Safe Restart Funding Phase III Reporting

Phase III of the Safe Restart Funding for Transit program provided an allocation of up to $18,105,442 to London Transit to support COVID-19 related pressures incurred from of April 1, 2021 through December 31, 2021. Eligible expenditures for this funding were consistent with those for Phases I and II, noting they need to be netted against any savings associated with COVID-19 (e.g. reduced service).

The required submission to the Ministry of Transportation with respect to the use of Phase III Safe Restart Agreement funding was submitted on October 26, 2021. The table below sets out a summary of the submission noting that actual impacts were provided for the period April through September, and estimated impacts were provided for the period of October through December 2021.

Summary of Phase III Reporting Submission

It should be noted that, as per the funding guidelines, the impacts set out in the table above are measured against the 2019 budget year given this was the last full year of normal operating circumstances prior to the onset of the pandemic. As such, the variances in the table do not reconcile with those provided as part of the monthly financial updates, which are comparing actual to budget against the 2021 budget.

Further, as indicated in the table, should the estimates for the period October through December of 2021 be accurate, the Phase III funding allocation will have a remaining balance of approximately $11 million, which, consistent with the funding agreement guidelines, has been requested to be carried forward into 2022 to address the COVID-19 related impacts in the 2022 operating budget.

The final available amount, as well as any conditions on use including the period for which the carry-forward funds are applicable to will be known at the time of budget recosting and will be included in the final recommendations with respect to the recosted operating and capital budgets presented to the Commission in March 2022.

Recommended by:

Kelly S. Paleczny, General Manager