OC Transpo facing multimillion-dollar budget deficit as low ridership continues

An east-bound O-Train pulls in to Rideau Station on the Confederation Line of the Light Rail Transit system in Ottawa, Ont. (Brenda Woods/CTV Ottawa)

OC Transpo has implemented a discretionary spending freeze and continues to press the upper levels of government for more funding to help offset a projected multimillion-dollar budget deficit this year.

A report for the Transit Commission shows OC Transpo is projecting a $40.8 million budget deficit in 2023, as the transit service continues to experience lower transit ridership and fare revenue post COVID-19 pandemic.

The Transit Commission approved the 2023 budget with a projected $39 million deficit, hoping the upper levels of government would provide additional funding under the Safe Restart Agreement to cover transit deficits linked to COVID-19. However, as of today the city of Ottawa has received no commitment from the Ontario and federal governments for additional funding.

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Fare revenue is projected to be $12.3 million below budget this year, resulting in a $51 million revenue shortfall. Staff say $10.534 million in operational savings will offset the transit revenue shortfall due to COVID-19.

"The forecast surplus by year-end is heavily based on reduced compensation expenditures from current vacancies and a pause on hiring, lower O-Train Line 1 service maintenance costs due to performance deductions per the agreement with (Rideau Transit Maintenance) and lower fuel costs," the report says.

"These savings are estimated to be partially offset by higher fleet maintenance costs and higher Para Transpo costs."

The report notes any potential savings from the shutdown of the Confederation Line for 28 days in July and August for maintenance issues and the delayed opening of the Trillium Line cannot be estimated at this time.

"Various strategies will continue to be leveraged to address the forecasted deficit or reduce and/or remove the forecasted year end deficit," staff say.

The report says savings have been found through a discretionary spending freeze, a review of capital project spending and the delayed opening of the Trillium Line which "would result in unspent operating funds in 2023."

Staff say the city continues to advocate for funding from the upper levels of government.

OC Transpo is looking at several options to boost revenue and decrease losses, including a route service review as part of the 2024 budget process and the launch of on-demand transit in Blackburn Hamlet this fall. Staff are also proposing a subscription-type fare option for hybrid workers, allowing riders to purchase a discounted number of fares for a certain period.

Staff are already proposing fare hikes and service cuts, including aligning bus routes to "current ridership levels" in 2024 to address a revenue shortfall. The 2024 budget directions report recommended a 2.5 per cent hike in transit fares and a 2.5 per cent increase in the transit levy on property taxes.