Roadwork suspended, more service cuts eyed as TransLink loses $50M monthly
VANCOUVER -- Despite cutting back on service, laying off 1,500 employees, trimming 10 per cent from executive salaries, and delaying roadwork, TransLink is still losing $50 million per month with dire warnings of further service reductions and scaled-back projects.
Under their most optimistic projections, by the end of this year, the transit authority will be $400 million in the red without a cash injection from senior levels of government. Next year, they worry operating revenues could be down $120 million to $885 million.
At a presentation to the regional mayors' council, TransLink staff laid out a grim updated picture of the transit authority’s future based on four different scenarios for how the COVID-19 pandemic could change transit habits based on the duration of mandated physical distancing measures, as well as changes to work behaviour.
Vice-president of transportation and planning, Geoff Cross, told the council that despite cost-cutting measures saving $25 million per month, TransLink revenues from fares, gas and parking taxes are down by $75 million leaving a $50 million gap in funding each month. They’re also working on how to safely resume frontal bus loading to protect drivers while being able to resume fare collection.
"We are also exploring options for deeper service cuts should they become absolutely necessary," read one of the lines of the presentation, which was streamed live on YouTube Thursday morning.
TransLink is seeing only one in five transit users compared to its normal levels, with only 150,000 unique riders per week. Their analysis has 80 per cent of riders making essential trips on a service where capacity is dramatically reduced due to less frequent bus and transit runs, as well as reduced seating to allow for greater physical distancing.
From mid-March to mid-April, TransLink cut 20 per cent of its service hours and on April 20 it announced 35 per cent in total cuts. Debt-service savings from "deferring some capital projects," delaying major road upgrades, operations and maintenance, reducing "non-service operating expenditures" and drawing on what it calls critical reserves are also measures TransLink said have been taken to stem the financial bleeding.
CEO Kevin Desmond said the messaging from the premier has him optimistic that the province will work with the federal government to hammer out an aid package to cash-strapped cities since transit will be a critical component of restarting the economy. He believes capital projects may also be saved by those considerations.
"It will also depend on what government may be providing in terms of stimulus funding and where and how government grants that stimulus funding," said Desmond. "Public sector infrastructure construction projects are typical stimulus type of efforts so the fate of our capital program, how we will shape or re-shape our capital program will also be dependent on how that next round of stimulus funding might come forward and what role public transit projects might play in that."
But, when CTV News asked how he was able to balance the idea of further cost-savings with the potential need for ramped up service after the premier’s announcement Wednesday that “we are seeing light at the end of the tunnel” and that cabinet is looking how to “phase in a return to normalcy,” Desmond acknowledged that the circumstances and the decision-making required combine for most challenging situation of his career.
“We’ve been struggling with this for five weeks; it’s an incredible dilemma,” he said “We’re bleeding money, on the other hand we’re an essential service…before we even reduced any service we reduced the capacity of our buses by 70 per cent.”
Desmond says making changes to a regional transit system takes time — so the premier’s cautiously optimistic statement caught him by surprise.
“Just as we’re announcing service reductions, the fullest of which would happen later in May — we hear maybe in late May and in June the economy could start reopening a bit,” said Desmond. “It’s a terrible, terrible dilemma.”
Four scenarios in TransLink’s forecast
At the mayors’ council presentation, Desmond revealed TransLink policymakers closely monitor the daily briefings by the province’s top doctor to be well apprised of how the pandemic is progressing and Dr. Bonnie Henry’s responses to how soon physical distancing measures could start being relaxed.
They have four scenarios they’re working under as a result:
1. "Quick recovery", based on a projected end to physical distancing on July 1, with 90 per cent of service restored by September in time for the start of the school year.
2. "Lasting Impacts", also based on a July 1 return to relative normal, but with a two-year economic depression with "lasting socioeconomic impacts and changes in travel behaviour."
3. "Hibernation", where a longer period of physical distancing will continue as a vaccine develops but where travel and work recovery happen quickly.
4. "Paradigm shift", the most dire prediction where long-term distancing results in "the laptop set" opting to work from home more permanently and transit habits change more or less forever.
"People’s travel behaviour will change. They’re changing right now in the trips they’re making — they’re walking more, they’re taking a car for different things," said Cross. "There will be an inertia in coming back to transit or to other modes that we need to consider in our thinking. We also know that people’s tolerance for crowding or over-crowding like we had in the system, will be lower."
Bridging the financial gap
The mayors’ council members had several questions about raising funds, including the idea of raising fares, which was raised by West Vancouver councillor Craig Cameron.
Desmond said that they’ve already delayed a July 1 fare increase and while raising fares is on the table, they have concerns about affordability, especially as some municipalities are already deferring property tax hikes as the unemployment rate continues to rise and people have trouble satisfying their monthly expenses.
Burnaby Mayor Mike Hurley was blunt about where he would like to see further cost savings.
"If further cuts are needed, I think we need to take a long, hard look at the offices and management staff to match up to the deep cuts made to service where the rubber hits the road," he said to the council and assembled TransLink brass.
Desmond responded that they’re in an "acute emergency management phase" and that in the next two phases of planning, they should have a better handle on where to save.
“We’ll have to reimagine a lot of what TransLink does,” he said. “Everything becomes on the table at that point.”
The Canadian Urban Transit Association made an appeal to the federal government on behalf of Canada’s major cities for $400 million per month to compensate transit agencies for lost revenues and get them through the cash crunch as people stay home.
“You’re going to have a bus that can maybe only carry 10 or 12 people (due to physical distancing requirements), then you still need to have that frequency of service without the revenue coming in, so this is a problem we’re seeing across the country,” said CUTA president Marco D’Angelo. “We have to have a transit network ready to go to bring Canada’s commuters back to their jobs, so we don’t want to break the network.”