Saint John bus routes may soon have to be cut as Transit continues to struggle to reign in its budget, warns the deputy mayor.

City council had ordered three of its departments — fire, police and transit — to hold their budget increases to one per cent this year.

But Frank McCarey, Transit's general manager, said that hasn't been possible with higher than anticipated fuel prices wreaking havoc on the commission's bottom line.

'Council may very well be faced with asking for further reductions in that service.'— Deputy Mayor Stephen Chase

"There was a real shot in the cost of fuel," he said.

Diesel, budgeted at 90 cents a litre, has cost closer to $1.11, even at the government rate, McCarey said.

"We use close to two million litres a year, so it's had a very significant impact on us."

McCarey, who previously estimated every one-cent increase in diesel adds about $20,000 a year in costs, would not speculate on whether route cuts are on the way.

Tough fiscal times

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Stephen Chase expects it will be a difficult decision for council. (CBC)

But Deputy Mayor Stephen Chase predicts cuts could happen.

"Already city transit is tracking significantly higher than one per cent," he said. "Council may very well be faced with asking for further reductions in that service."

Chase said council could agree to lift the one per cent cap on transit's budget, but believes that would be extremely difficult, given the city's financial situation.

The city's employee pension plan has an estimated $129-million deficit. City officials have said without reforms, residents could face a 12 to 14 cent tax hike, or up to $10 million in service cuts.

Chase expects it will be a difficult decision for council.

"City transit bus service is a very important service to many people in this community," he said.

In 2010, the number of people taking the bus increased by 12 per cent.

Transit plans to brief council on the situation at a closed-door meeting in the near future.

Earlier this year, the commission increased bus fares by 25 cents to $2.75 to help cover its $300,000 property tax bill for new headquarters on the east side.

It also cut back on the number of hours buses are on the road and told council it was looking for seven new buses within two years, despite cutbacks.

The average transit bus in Saint John is 11 years old and the commission has said it doesn't want the fleet to fall into disrepair. New buses cost about $425,000 each.