Possible hike in LTC bus fares to offset financial strain

Work will soon begin on the London Transit Commission’s 2024-2027 budget submission to city hall.

A new report to transit commissioners provides a high-level outlook on the financial challenges facing the bus system and suggests strategies to balance upcoming budgets including an increase to bus fares.

The budget submission to city hall will be divided into two parts — a base budget for maintaining the status quo and a growth budget for service enhancements.

Budget pressures impacting the base budget include:

• diesel fuel pricing 45 per cent higher than projected in current multi-year budget
• general insurance costs increased 48 per cent during current multi-year budget
• hourly cost of paratransit has increased 27 per cent
• bus/ancillary equipment pricing has increased 37 per cent

Meanwhile, revenue generated from ridership hasn’t fully recovered from the COVID-19 pandemic.

“The 2023 conventional transit service operating budget includes a shortfall of $6.5 million resulting from a combination of decreased passenger revenues, increased expenditures and the desire to maintain the City of London funding at the original multi-year budget submission for 2023,” explained the report.

Earlier this year, city council set the target for the average annual tax increase in the upcoming 2024-2027 municipal budget between 2.9 per cent and 3.9 per cent, plus an additional 0.5 per cent for growth investments.  

That target leaves the London Transit Commission with little financial wiggle room.

“A cursory review of the aforementioned issues indicates that the base budget increases for the conventional transit service in the next multi-year budget submission are likely to exceed the City of London targets,” admitted LTC administration in the report.

“The balance of the budget that is not funded by transportation/operation revenues will be shared between fare increases and increases to City of London investment,” the report recommended.

It also notes that fare increases must be undertaken in a manner that do not result in ridership loss.

As he waits at a bus stop, Ian Soares told CTV News he’s worried about how a fare increase would impact Londoners on fixed incomes, “I make a decent amount of money for myself, but I know that a lot of people don’t.”

“I would prefer to pay more if it means that I have better service,” said Dina Koishima before boarding her bus.

London transit has planned thousands of hours of service improvements in the coming years, but budget limitations may force the plan to be scaled back.

Outstanding service improvements from the current five-year service plan, as well as those that have been identified subsequent to the plan’s approval, total 323,800 hours.

They include improving the frequency on routes connecting to Rapid Transit, expanding service to industrial parks, extending routes to new neighbourhoods and longer hours of operation.

However, LTC administration has now recommend cost estimates be provided for the addition of just 22,000 and 24,000 hours each year for the commissioners’ consideration, “these scenarios would provide the ability to address between 2 per cent and 30 per cent of the outstanding service improvements over the four year period and result in a service increase of approximately three per cent annually.”

“I wouldn’t mind paying extra for bus fare because I work downtown,” said Tyler Childerhose as he waits for his bus, “I know how much parking is downtown and the increasing gas prices.”

The London Transit Commission will provide high level budget direction to administration at a meeting May 30, and receive the draft budget submission in August.