I got an email from a person working for a city operating light rail here in Canada and he/she said that there is a problem with my assumptions of operating costs per service. They asked I do not say anything to identify where they are from so I can only paraphrase what we talked about in our emails.
That they pointed out is that my assumptions of the amount of rail cars and the total use of the line means there are fixed operational costs that will boost the hourly operational cost of the line. They said it would be safer to assume for the scenario I suggested having an operational cost of $300 per hour +- $25 per hour.
Further in their emails they made it clear that they could not see the business case for light rail to the Westshore, certainly in their planning they would not consider offering light rail for such a small population as they could not afford it. Their existing light rail works well, but expansion will only come when there is a proven demand for the service that meets several benchmarks they have set.
2) The BC Transit budget issues for Greater Victoria Transit come as a surprise to me. In the fall there was no indication I could see of such a big gap between expenses and revenues. Both were down by some, but down equally and the projection to the end of the budget year was for a 2% budgetary shortfall.
I am not sure what has happened since the fall to make such a big difference. Certainly in the plan presented there is a huge gap between revenues and expenses. Most of this seems to come from BC Transit projecting large increase in costs in each of the coming years, 8.5%, 7.6% and 4.5%. At the same they are projected very slow growth in revenues, 2%, 2% and 1.2% in the coming years.
This means an accumulated deficit of over $33 million over the next three years. In 2013/14 the shortfall is projected to be 15.7% or $15.6 million.
There are three options for how this gap can be closed:
- Higher fares
- Less service
- Higher property taxes
I am not a fan of any one of those three. If passenger revenues are to remain at about 35% of the total revenues, BC Transit needs to raise the fares by 15% over the next three years. To do this you would have to raise the standard fare to $2.88 - call it $3. Youth/senior fares to $1.90 - call it $2.00.
The biggest way the gap can be closed is through higher property taxes. Even with the projected 32% increase in transit property taxes and increased fares, there is still as shortfall in 2013/14 in the order of $4 million.
BC Transit has suggested a reduction of 10,000 hours of service as a way to save more money, but the dollar amount is not dramatically high.
The 32% increase being talked about in the media is only dealing with next year, it is not addressing the problem of 2013/14. There is a bigger gap projected with nothing in place for how to deal with it.
I do not have access to the full financial picture of the Greater Victoria Transit Commission, but outwardly there seems to be something odd to see the operational costs rising so much for the next couple of years. The projection for next year is 3 times the rate of inflation and this is without any increase in service. As I said, I am not privy to the details, but something seems wrong that the costs are rising so much in the next three years.