Wednesday, September 26, 2007

Back to transit - the TTC cost spiral

It's been a few months since I wrote much about transit. What is there really to write - nothing much changes at the TTC. However, since we're about to get socked with a mammoth property tax increase in one form or another - you all might be interested in a big reason behind the increase.

(The proposed Land Transfer Tax is a property tax - you just pay it all at once when you are selling/buying.)

A while back I analysed the comparative performance of the Montreal transit system (MTC or STM depending on the language) and the TTC. I've put together some updated figures:

Montreal - MTC/STM

Operating cost per rider
1994 actual: $1.63
2007 budget: $1.88

That's a 15.4% increase overall - but a decline of 2.9% when inflation is taken into account. This means that the Montreal system lowered its unit operating costs - even when the increased cost of fuel and electricty are taken into account.

Toronto - TTC

Operating cost per rider
1994 actual: $1.73
2007 budget: $2.35

This is an overall increase of 35.8%!!!!! OR 20.4 percentage points higher than Montreal.

What does this mean in real $$$. Well, if the TTC had matched the STM's performance, it's 2007 operating cost per rider would be:

1.154 *$ 1.73 = $1.995 / rider

or $2.35 - $1.995 = $0.355 lower than the actual budget.

@ the 2007 projected ridership of 461 million

461 million * $0 .355 = $163.7 million

In other words, the TTC has missed and is missing opportunities to become more efficient while the STM hasn't and isn't.

The Montreal system's performance shows that you can have a succesful transit system without an ever upward spiral in costs.

The worst for the TTC is yet to come.

The 2008 TTC pro forma budget that is referenced here shows that the TTC costs will explode next year. Operating expenses are set to grow by $128 million ($1,083 million ==> $1,211 million) while ridership revenue will grow by only $24 million. (This was before the recent fare increase was voted in.) This would vault operating cost / rider to about $2.59 - a whopping 10% increase.

Well -the $163 million in lost opportunity into 1994 and the $104 million in growth in required subsidy this year would give us back $267 million - which would make the Land Transfer Tax largely unnecessary.

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