Ottawa Considers Drastic Changes To OC Transpo

09/19/2023

This is a release from the City of Ottawa:

Backgrounder

Today, City staff presented an important update on the transit long range financial plan. This update, for members of Council, is aimed to ensure they have the latest information on the financial landscape of our transit services to help inform decisions that will shape Ottawa’s future.

After enduring two years of economic impacts due to pandemic shutdowns and restrictions, we now find ourselves in a changed economic environment. The environment is characterized by inflation rates nearing three percent, and higher interest rates, now sitting at five per cent. Furthermore, the pandemic has acted as a catalyst, accelerating the shift towards a hybrid workforce model.

City Still Plagued By Pandemic Fallout: Annual Report

In light of this new reality, numerous factors have converged, placing substantial financial pressures on our transit services.

Contributing factors behind budget challenges

Reduced ridership: pandemic shutdowns and the shift to a hybrid workforce model has led to a lower number of people using public transit
Inflation pressures: rising inflation affects both our operations and capital costs, making everything more expensive
Increased interest rates: with higher interest rates, our debt-related costs have risen, impacting budget
Rail operating costs: the cost to operate our rail services has increased due to inflation, operating and oversight requirements

Change in the budget pressures

Our financial landscape has evolved significantly since our last forecast in 2019. Our long range financial plan forecasts to the end of 2048 which aligns with the LRT maintenance and operating agreement.

Budget pressures over the forecast period to 2048 now include:

$3.7 billion shortfall in ridership revenue, which is $100 million a year in 2023 dollars
$800-million decrease in Gas Tax Funds due to the cancellation of the gas tax doubling
$500-million increase cost for buses
$1.4 billion increase in Stage 1 and 2 of light rail operating costs
$1.1-billion increase in the net operating cost for Stage 3
$900 million increase in the capital cost of including all the Bus Rapid Transit projects identified in the Transportation Master Plan

Finding solutions to managing the budget pressures

The City is exploring several mitigation options to continue our commitment to fiscal responsibility and providing effective services, including:

Increasing the transit tax
Delaying, phasing-in or re-scoping Stage 3 of the LRT
Increasing transit development charges to align with the City’s growth requirements
Revisiting the planned rapid bus transit system and dedicated transit lanes
Continuing to seek funding from senior levels of government
Exploring other sources of revenue

Next steps

Ottawa Does Nothing At Deadly Level-Crossing: QUOTABLE

The City has shared this information with members of Council and residents to be transparent and open about the most recent information and projections available for transit capital and the difficult financial realities facing our public transit system. Over the coming months, City staff will examine any potential mitigation measures to offset these budget pressures. Our goal remains to ensure the City continues to provide a safe and reliable transit system that meets the evolving needs of Ottawa residents now and in the future.

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Tags: cutbacks OC Transpo Ottawa

John says:
09/19/2023 at 8:40 AM
The elephant in the room has to be that we are about to go for approval of Lansdowne 2.0, taking on perhaps as much as $300 million in debt to pay down with annual taxes (from the condo indeed). Will Lansdowne 2.0 get higher priority than transit? Will we be asking for Provincial/Federal transit money that might effectively be subsidizing Lansdowne 2.0?
Ken Gray says:
09/19/2023 at 9:14 AM
John:
That is an very very good point.
cheers and thx
kgray
Ron Benn says:
09/19/2023 at 10:10 AM
The word “or” is missing in city hall’s lexicon, and it has been for more than a decade. What is more important to the residents of Ottawa:
> Lansdowne; or
> a functioning public transit system; or
> timely repairs and maintenance of existing public housing; or
> construction of more public housing; or
> pretty much anything other than Lansdowne.
Therein the problem lies. Not enough people in decision making positions at Ottawa city hall are capable of understanding the need to set priorities, and by extension be prepared to say no to projects and programs that are lower on the priority list. Too many people in decision making positions at city hall only think in the context of “and”, not “or”.
Cameron Johnstone says:
09/19/2023 at 10:29 AM
The first bullet on O.C. Transpo’s mitigation measures should be to send Mayor Sutcliffe on the next Via train to Toronto to stand on the same podium as Olivia Chow used yesterday to demand Premier Doug Ford loosen the purse string on his huge surplus and start funding Transit in Ontario’s second largest city. Olivia Chow didn’t mince words when she detailed how the Province had downloaded Transit to the municapalities starting with Mike Harris. Cutting fares and making service reliable will attract ridership but Suttcliffe has to forget the Jim Watson style photo-op campaign and follow Olivia Chow’s lead for Provincial Transit funding.
sisco farraro says:
09/19/2023 at 11:11 AM
Why hasn’t phase 2 of the LRT been abandoned already ? Asking Ontarians and residents from other provinces to deal with Ottawa’s inability to fund and manage a public transit system is criminal.
The Voter says:
09/20/2023 at 12:32 AM
Great question, Sisco, but I would modify it slightly. There are parts of Stage 2 that are already built and it may not be cost-effective to mothball them. We need to have a thorough examination of what can be salvaged or converted to Bus Rapid Transit and what needs to be removed from the plans until the money exists to pay for it without hobbling the City and its other operations.
Stage 3 needs to be totally cancelled with an eye to doing a complete new plan if we ever are in the position to move it forward. By “we” in this context, I mean our grandchildren and great-grandchildren, of course, because none of us are ever likely to see it in operation other than by looking down from the heavens. By the time Ottawa is going to be realistically in a position to move forward on Phase 3, none of the work that’s been done will be of any use in the face of technological advancements and changing environmental conditions. We need to just scrap it and write off the losses to date.
Just an aside. Remember when Jan Harder had an environmental assessment done so it looked to her constituents as if the LRT would be arriving sooner rather than later in Barrhaven? Remember how sensible people said it was a waste of time and money since it would have expired by the time there would be shovels headed for Barrhaven sometime in the then-distant future? Jan will be dust before LRT ever gets there. Maybe people shouldn’t have been in such a hurry to put the kibosh on Bob Chiarelli’s plan that would have been in Barrhaven years ago.
And I really hope someone’s taken Allan Hubley aside and explained to him that Kanata and LRT may never meet.