OC Transpo considers fare hike, possible bus route cuts to deal with deficit in 2024

An OC Transpo bus is seen at a public transit garage in Ottawa, Thursday March 4, 2021. (Adrian Wyld/THE CANADIAN PRESS)

OC Transpo is expecting a bumpy road in 2024 due to continuing low ridership, with staff recommending fare hikes and service cuts, including aligning bus routes to "current ridership levels," to address a projected multimillion-dollar fare revenue shortfall.

A report for the finance and corporate services committee outlining the proposed 2024 city of Ottawa budget directions warns the OC Transpo transit network is facing "the greatest financial challenge" of all city services next year.

"OC Transpo continues to face financial pressures as the service continues to realign to the changing ridership needs and new services such as O-Train Lines 2 and 4," says the report for the Sept. 5 committee meeting.

"Ridership and fare revenue continue to be lower post-pandemic because many downtown office workers are working from home or are working a hybrid schedule."

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OC Transpo is projecting a $35 million shortfall in fare revenue in 2024 due to the post-pandemic ridership levels. Staff developed the 2023 transit budget with an expected ridership of 70 per cent of pre-pandemic levels, which included a projected $39 million budget deficit.  

In addition to the projected revenue shortfall, staff warn the transit service will face "new costs" in 2024 from the operation of the Trillium Line between Bayview Station and Riverside South, along with annual inflation, contract settlements and increasing costs through contractual commitments.

The city of Ottawa is looking at a 2.5 per cent transit fare hike in 2024, and a 2.5 per cent increase in the transit levy on property tax bills, which will generate an additional $15 million in revenue for OC Transpo. However, staff say OC Transpo is still facing a $35 million fare revenue shortfall next year. 

OC Transpo launched a Bus Route Review in the spring, with staff saying it would "help inform the future of OC Transpo's bus system." Recommendations for possible changes to bus routes are expected to be presented to the Transit Commission this fall.

The report for the Sept. 5 finance and corporate services committee says staff are continuing the Service Review to "reduce spending" in 2024.

"Including alignment of bus routes to current ridership levels and patterns through the bus route review, investigation of on-demand service as a way to provide service in low-ridership areas at a lower cost, reductions in payments to rail contractors in 2024 (based on current conditions), realignment of non-front-line staffing principally in administrative, communications, and technical areas, and examination of alternative ways to provide some operational services," the report says.

"Staff are continuing to review all 2024 financial pressures and are taking economies where available."

Transit Services general manager Renee Amilcar said in the spring there is a "need to optimize our existing transit system" due to changes in ridership since the start of the COVID-19 pandemic and with the upcoming launch of the Trillium Line.

The staff suggestion for "reductions in payments to rail contractors" based on "current conditions" comes as the Confederation Line operates with single-car service. OC Transpo moved to single-car service this month after a new Safety Note recommended the front and rear hubs on all trains must be replaced every 60,000 km. Amilcar has said the single-car service is enough to meet current ridership levels.

In June, OC Transpo reported bus ridership was at 73 to 75 per cent of pre-pandemic levels, while O-Train ridership was at 43 per cent of pre-pandemic levels.

Coun. Sean Devine reacted to the staff report on social media, saying proposed changes at OC Transpo are "very concerning and can actually lead to the 'death spiral' faced by transit systems when service continues to degrade and diminish, losing more and more riders, which leads to yet more service cuts and fare hikes."

"The unintended consequences of these actions may end up far more costly and far more devastating to the city as a whole, pushing more and more residents away from transit and back into cars, with all the costs that come with that."

A report will be presented to the Transit Commission and Council in November outlining the financial pressures for OC Transpo and a "description of the effects that any change would have on service for customers."

The 2023 OC Transpo budget included a fare freeze, which cost $5 million, and extended free transit for kids to include children aged 8 to 12 starting July 1.