Vancouver-area transit agency to cut costs as first step to avoid ‘fiscal cliff’

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Vancouver’s regional transit agency is preparing to cut costs and find new revenue to save $91-million a year as a first step to dealing with the “imminent fiscal cliff” it says it is facing.

But TransLink CEO Kevin Quinn said that the agency is doing everything it can to protect front-line services, which take up 85 per cent of its $2.4-billion budget.

“We’re not doing it at the expense of services,” said Mr. Quinn, whose agency also commissioned a report from the accounting firm Ernst & Young to verify that TransLink is not wasting money. “We want taxpayers to have some reassurance that we’re using every taxpayer dollar efficiently.”

A report going to the mayors’ council Thursday says the agency is in the grip of a structural deficit – the “fiscal cliff” – as revenues are declining while costs for many new services, along with existing ones, are soaring.

“TransLink’s current funding model is unsustainable beyond the end of 2025,” says the opening sentence in the report from the agency’s financial-services department.

The plan proposes to cut $75-million in office costs and add $16-million in revenue to the operation through measures such as increased crackdowns on fare evasion.

But Mr. Quinn said scaling back new services that are in the works, like the new bus rapid-transit lines and additional routes, is not on the table.

“The population is growing at an unprecedented rate. Given the growth, it’s not an option to not expand.”

Costs for those projects – new subway lines along Broadway and into Surrey, as well as new rapid-bus networks and more – have skyrocketed along with infrastructure project costs everywhere.

The TransLink report says the agency was able to maintain services since the beginning of the pandemic as a result of huge injections of relief funding from the provincial and federal governments. B.C. provided TransLink with $655-million in extra transfers in 2022 and 2023, while the federal government gave about $355-million.

But that help is depleted and there is no new aid money planned.

As a result, TransLink, like transit operations in Montreal and Toronto, is finding itself confronting a difficult financial future. Montreal’s system projected a shortfall of $560-million for 2025 and told residents not to expect any new services for five years. Toronto has said it needs around $1.8-billion to $2.3-billion a year for 10 years to maintain and upgrade its existing fleet, along with more money for new lines.

“While senior government emergency relief funding has allowed us to maintain services at close to pre-COVID levels throughout the pandemic, lower ridership, declining fuel-tax revenues due to adoption of zero-emission vehicles, and significantly higher inflation have all put a strain on TransLink’s finances, resulting in a structural deficit, now estimated to reach $5.3-billion by end of 2033,” said the Vancouver report.

“This equates to an average annual shortfall in funding resources of approximately $670-million per year, starting in 2026.”

TransLink fare revenue, which provides about a quarter of the operations money, suffered because the province prohibited fare increases. At the same time, ridership was almost halved in the early part of the pandemic and even now it is only at about 85 per cent of prepandemic levels, with central Vancouver and other central suburbs at 72 per cent as fewer people travel downtown.

In spite of that, Mr. Quinn noted that half of all riders on the system, which amounts to about half a million trips a day, are still using transit in the central areas so there is no option to trim services there.

Mr. Quinn said a larger solution is needed to address the funding gap because it can’t be done through service cuts or fare and tax increases by his agency alone.

Instead, senior governments need to provide steady and significant money to keep all Canadian transit systems healthy.

“Our model we have now is quite broken. It relies on a fuel tax that is declining.”