Staff Report #7
October 25, 2023
To All Commissioners
Re: Advocacy Update
Recommendation
That the report be NOTED and FILED.
Background
As the Commission is aware, London Transit is a member of both the Ontario Public Transit Association (OPTA) and the Canadian Urban Transit Association (CUTA), and administration is represented on the respective boards of each. In addition to providing opportunities for the sharing of best practices with peer transit systems, these Associations undertake advocacy efforts at both the Provincial (OPTA) and Federal (CUTA) levels.
During the pandemic period, OPTA and CUTA were integral in the creation of the Safe Restart Funding program, which was provided in partnership from the Provincial and Federal governments to transit systems to cover the operational impacts of continuing to operate public transit service through the pandemic period. Eligible expenditures included losses of revenue associated with lower ridership as well the period when no revenue was collected due to the rear-door boarding protocols, incremental costs associated with pandemic-period operations as well as operating and capital costs associated with increased cleaning safety, etc. Over the period of 2020 through 2022, $27.9 million of Safe Restart funding was utilized to offset pandemic-related budget impacts, which avoided the need to seek additional funding from the City of London and/or reduce service levels to balance the budget. The Safe Restart funding ended as of December 31, 2022.
The 2023 operating budget includes a shortfall of approximately $6.9 million, which is the result of a combination of lower revenues and higher expenditures (primarily due to significant inflationary pressures). While this shortfall will be managed with the utilization of the Commission’s reserves and reserve funds, this approach is not a sustainable option going forward. As such, the Commission’s 2024 status quo budget request to the City of London includes an approximate 22% increase in City of London investment as well as an approximate 18% increase in fares in order to balance the budget. This scenario is consistent with transit systems across the Province. A recent survey of Ontario transit systems undertaken by OPTA includes the following findings:
- Transit systems experienced an average increase in operating costs in 2023 of 14%
- Transit systems experienced an average increase in capital project costs in 2023 of 41%
- Transit systems implemented fare adjustments to address budget shortfalls:
- 2022 – 29% of systems increased fares
- 2023 – 50% of systems increased fares
- 2024 – 47% of systems will increase fares
- Strategies utilized to address shortfalls:
- Adjust/reduce service levels
- Raise fares
- Draw on reserves
- Identify new sources of revenue
- Defer projects
- Find other efficiencies
While all of the aforementioned strategies are common practice as part of a budget exercise, implementing these strategies at a time when ridership is growing beyond what can be accommodated on current services and when riders are already struggling to make ends meet due to inflationary pressures on the cost of living is contrary to a number of longstanding best practices with respect to public transit services, including but not limited to the following:
- Services should be enhanced in preparation for anticipated growth in ridership demand, in order to ensure a quality experience for new transit riders. The province of Ontario, and virtually all municipalities across the province are experiencing unprecedented growth due to higher than forecasted immigration. Not only has this resulted in increased housing costs due to limited stock, it has resulted in increased pressure on transit service that are already operating at or beyond capacity.
- Fare adjustments should be aligned with service improvements in order to mitigate a loss of ridership. Riders will pay for a service they believe there is value in. Fare adjustments coupled with service reductions and/or lack of service growth to respond to increased ridership pressure are more likely to result in ridership losses.
In response to these issues, OPTA and CUTA have been undertaking advocacy efforts focused on what is required to avoid the aforementioned responses which will inevitably lead to the downward spiral created when fares increase and service decreases resulting in ridership declines. The transit sector experienced this phenomenon in the 1990’s when provincial funding levels were significantly reduced and municipalities did not have the means to make up the shortfall. The resulting ridership losses took in excess of ten years to be restored. The remainder of this report provides an overview of the current OPTA and CUTA advocacy efforts.
Ontario Public Transit Association – Provincial Advocacy
In light of the significant operating and capital budget shortfalls being experienced at transit systems across the province, OPTA advocacy will be focused on increasing the level of funding provided by the Province of Ontario that is directed at investment in public transit services.
In 2004, the Province of Ontario announced the establishment of the Provincial Gas Tax Program (PGT) dedicated specifically for public transit services (conventional and specialized transit services). PGT funding supports operating and capital expenditure investment related to the maintenance and growth of services and ridership. The PGT program is a performance based program, with the annual moneys received by respective transit systems being based upon the transit service’s position in terms of population and ridership in relation to total population and total ridership for all Ontario public transit services. The amount of PGT moneys available is fixed at $0.02 per litre of gasoline sales in a given year. Annual allocations are placed in a reserve fund maintained by the transit service with the reserve fund being subject to annual reporting and audit to/by the Province.
The total available PGT for the 2022/23 allocation year is $379.5 million, which is made up of the $0.02 per litre allocation and a top up of approximately $80 million to maintain pre-pandemic funding levels. London’s allocation has been calculated at $11,052,415 which is slightly less than the previous year’s allocation. For 2024, this entire amount is allocated to the conventional transit service status quo operating budget.
On October 30, 2023, OPTA will be holding an advocacy day at Queens Park during which transit system members will meet with Ministers and Ministry staff to discuss the need for increased provincial funding which will enable transit systems to grow to meet the current and future demand associated with continued growth in population across the province. The final materials for this advocacy effort were not finalized at time of report writing; however, administration is participating in the creation of same and will also be participating in this event.
Canadian Urban Transit Association – Federal Advocacy
On September 20, 2023, CUTA held its annual Policy Forum in Ottawa which focused on three key topics; the policy intersections between transit and housing, ensuring safety for transit riders and workers, and funding and financing public transit. Attendees at the forum included transit system, business and labour representatives, as well as staff from various federal government ministries. The Honourable Sean Fraser, Minister of Housing, Infrastructure and Communities was the keynote speaker.
On September 21, CUTA members participated in a number of meetings with various federal Members of Parliament and Ministerial staff to provide CUTA’s recommendations for programs/initiatives to address the aforementioned issues facing transit systems across the country. The documents shared during these meetings are set out in the Enclosures, in summary, the recommendations tabled during these meetings included:
- Shifting the start date of the Permanent Public Transit Fund into the 2024 budget (currently scheduled for the 2026 budget) to assist transit systems in addressing infrastructure deficits;
- Open the intake process for the Permanent Public Transit Fund in 2024 so transit systems can begin the planning and application process in advance of the funding being made available;
- Encourage the Federal Government to take a leadership role in an upcoming national taskforce, along with provinces, local governments, and transit agencies, to develop a national public transit strategy with a new funding model for Canada’s public transit agencies;
- Establish an application-based transit safety and security fund that allocates $75 million per year for two years to assist transit agencies with the specific expenditures needed to prevent, combat, and respond to safety and security incidents on their systems; and
- Strengthen penalties for assaults on transit workers by amending subsection 269.01 of the Criminal Code, expanding beyond its current definition of transit operators to include all transit workers.
In the coming weeks, CUTA will be releasing a document which identifies a number of recommendations for all levels of government with respect to how public transit can help tackle Canada’s housing crisis. This document is the result of extensive consultation across the country with transit systems, municipalities, provincial governments, the federal government, developers, housing stakeholders, and academia. This document will be the basis for future ongoing discussions with all stakeholders on this critical issue.
Enclosures
I – CUTA Paper – Investing in the Future of Canadian Communities Through Public Transit
II – CUTA Paper – Ensuring Sustainable Funding Through a New National Public Transit Strategy
III – CUTA Paper – Prioritizing Safety on Public Transit
Recommended by:
Kelly S. Paleczny, General Manager