OC Transpo projecting $3.3M surplus despite revenue slump
Transit department finds ways to save despite slack earnings from CTC, condo buyers
OC Transpo is on track to post an operating surplus this year, despite earning less than it expected from fares, the Canadian Tire Centre and condominium developers.
That's still a big improvement over this time last year, when the city as a whole was projecting a record deficit for 2015, and the city's transit department was responsible for spilling more than a quarter of that red ink.
- OC Transpo projects $11.5M deficit for 2015
- City of Ottawa faces largest deficit ever in 2015 at $41M
Last year departments were ordered to pull up their bootstraps and check in at the half-way point in 2016 to catch underlying money problems early.
The city's transit commission heard Wednesday that OC Transpo is headed for a $3.3-million operating surplus by year's end, even as revenues fall $4.2 million short of earlier projections.
CTC, condo revenue falls short
One reason for the drop in revenue is that riders are opting for cheaper fares, said Pat Scrimgeour, OC Transpo's assistant general manager of customer systems and planning.
"We're selling more monthly passes and less single-ride fares, so the average amount that we receive per customer is lower than budgeted," Scrimgeour said.
That's not to say that ridership is dropping. Instead, OC Transpo reported a slight rise in the first six months of 2016.
Revenues are also falling short because a couple of new ideas for making money are failing to hit targets.
It's doubtful the Canadian Tire Centre will pitch in as much money as OC Transpo expected for the extra buses it sends for events at the arena, said OC Transpo manager John Manconi.
And even the condo slump is affecting revenue. An initiative to encourage developers to offer transit passes to new condo buyers instead of parking spaces failed to take off.
With revenues down, Manconi said OC Transpo is finding savings internally, in a way riders shouldn't notice.
It has changed how it orders parts and the inventory it keeps, and has cut discretionary spending on basics such as stationery, said Manconi.
OC Transpo has also left about 100 of its 3,000 jobs vacant, he said.
- OC Transpo to shed 500-600 positions after LRT starts rolling in 2018
- More cuts possible after 6 city executives lose positions
"We had a hiring freeze on. Every single position that had to be staffed ran through my office, and there were a lot of noes," said Manconi.
A city-wide staff reorganization is included of the upcoming budget, and still more jobs will be lost when trains replace buses.
As it stands now, the city as a whole is slightly in the black. After the second financial quarter of 2016, it projected an overall operating surplus for 2016 of $6.6 million, where a quarter of that surplus would come from tax-supported programs and the rest from rate-supported programs.