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5. 2010 OPERATING AND CAPITAL BUDGET Q2 – TRANSIT COMMITTEE STATUS REPORT
Budgets de fonctionnement et des immobilisations 2010 – T2 – Rapport d’étape du Comité de services de transport en commun
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That Council approve the budget adjustments as detailed in Documents 3 and 4.
Que le Conseil approuve les ajustements budgétaires décrits dans les documents 3 et 4.
Documentation
1. City Treasurer’s report dated 23 August 2010 (ACS2010-CMR-FIN-0059)
2. Extract of Draft Minutes 48, Transit Committee meeting of 30 August 2010, to be issued separately prior to the Council meeting
Transit Committee
Comité du transport en commun
and Council / et au Conseil
23 August 2010 / le 23 août 2010
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource : Joanne Farnand, Manager, Financial Services/ gestionnaire services financiers
Finance Department/Service des finances
613-580-2424 ext./poste 22712, joanne.farnand@ottawa.ca
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Ref N°: ACS2010-CMR-FIN-0059 |
That the Transit Committee:
1. Receive the June 30 results and the 2010 forecast as outlined in this report for information; and
2. Recommend Council approve the budget adjustments as detailed in Documents 3 and 4.
Que le Comité du transport en commun :
1. Prenne connaissance des résultats du 30 juin et des prévisions de 2010 présentés dans ce rapport; et
2. Recommande au Conseil d’approuver les ajustements budgétaires décrits dans les documents 3 et 4.
Quarterly operating / capital status reports are prepared as part of the reporting framework approved by Council. Operating reports present actual year-to-date revenues and expenditures against the amounts budgeted for the corresponding period. Year-end forecasts are also presented in the second and third quarter reports. Capital reports provide detailed listings of the capital projects/programs currently in progress.
Document 1 provides operating budget detail, Q2 year-to-date results, and forecasted year-end results for the various Transit Department Branches reporting to Committee
Document 2 provides detailed listing of the status of capital projects / programs of the Transit and Light Rail Departments reporting to Committee sorted by category, namely, Renewal, Growth and Strategic Initiatives.
Documents 3 and 4 outline budget adjustments to capital projects requested by the Departments. Document 3 reflects the realignment of existing information technology related budgets in accordance with the works to be undertaken under the Transit Services Technology Roadmap; and shows the spending authority requirements that will be put forward in future budgets, for the technology roadmap. Document 4 outlines a budget adjustment required to reflect the cost of works that were carried out on the South West Transitway-Fallowfied to Jockvale project, prior to the approval of an Infrastructure Stimulus project (ISF) for this work. These pre-ISF costs are not eligible under the program and require City funding, through the form of transit supported debt authority and development charges.
Standing Committees will be receiving their respective Second Quarter (Q2) Status reports over the next few weeks. Included in each Q2 report will be a 2010 forecast for each of the programs and services that report to that particular Committee. Although the forecast contained in each Committee report may show either a projected surplus or a deficit, the overall corporate year-end position of the City is expected to show a small surplus. The complete corporate picture will be provided in the Q2 report to the Audit, Budget and Finance Committee in September.
Transit - Second Quarter Year-to-Date Results & Forecasted Year End
[1] Operating Budget
The year-to-date budget figures are prepared on a “calendarized” basis. Actual expenditures and revenues are compared against budget for the corresponding time frame. Staff have prepared forecasts of operating expenses and revenues for the full year, taking into account results achieved year to date.
The following table summarizes the operating results for the period ending June 30, 2010. Transit Services favours examining its operating results along the line of key expenditures across the department rather than according to cost categories branch by branch. This approach helps understanding the effect of expenditure and revenue drivers upon the results regardless of the organizational structure of the department.
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Annual Budget |
Q2 YTD Actuals |
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Year End Forecast |
Year End Surplus (Deficit) |
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YTD Surplus |
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(Deficit) |
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Transit – Operating Budget |
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Expenditures |
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120,826 |
62,169 |
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121,633 |
-807 |
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Operators |
-307 |
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Maintenance |
73,894 |
36,781 |
544 |
72,025 |
1,869 |
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Fuel |
34,646 |
17,040 |
317 |
35,129 |
-483 |
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O-Train |
4,259 |
1,918 |
326 |
3,933 |
326 |
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Facility Operations |
22,902 |
11,197 |
784 |
21,218 |
1,684 |
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Management & Administration |
43,875 |
21,577 |
1,275 |
42,201 |
1,674 |
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Contribution to Reserve |
39,919 |
19,960 |
0 |
39,919 |
0 |
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Para Transpo |
28,111 |
14,133 |
263 |
27,848 |
263 |
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Total Expenditures |
368,432 |
184,775 |
3,202 |
363,906 |
4,526 |
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Revenue |
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Provincial grants & contribution |
-24,954 |
-12,477 |
-24,954 |
0 |
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0 |
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Fees & service charges |
-163,930 |
-78,926 |
-2,406 |
-159,230 |
-4,700 |
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Other Revenue |
-4,097 |
-1,780 |
-140 |
-4,097 |
0 |
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Total Revenue |
-192,981 |
-93,183 |
-2,546 |
-188,281 |
-4,700 |
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Net Operating Requirement |
175,451 |
91,592 |
656 |
175,625 |
-174 |
Revenue
Revenue since Q1 has declined below budget levels. Ridership, following a record in December 2009, continued strong into 2010, however, it has retracted from the strong performance following the March fare increase. Ridership in Q2 was 6.7% lower than the budgeted levels and average fare declined by 2.7% on a net basis (i.e. below the 7.5% average fare increase) as customers sought means to lower their costs through discounted fares. The March 1st fare increase averaged 7.5% (the 3rd such increase since July 1st 2008) while consumer gas prices have dropped from an average of $1.28 per litre to an average of $ .98 per litre. The unseasonably warm weather of March and April also impacted ridership as historical trends point to increases in walking and cycling over Transit.
Ridership is expected to remain under budgeted levels for the balance of the year. 2010 ridership is expected to be 3.1% below budgeted levels and revenues are expected to be $4.7 million less than budget. The forecast levels of ridership and average fare remain uncertain at this time as the impact of HST on consumer gas prices; transit service improvements coupled with promotion and investments will continue to stimulate a mode shift to transit. The impact of the U-pass pilot has not been included in the forecast, as per the 2010 budget discussions, should any shortfall result this will be covered through a transfer from reserve funds.
Expenses
Transit Service staff have confirmed the full realization of the $10.1M Efficiency target planned for 2010. This reduction was attributed to the following:
Operator Costs (Scheduling) $ 1.8
Fuel (Hybrids + SmartDriver + Scheduling) 3.8
Maintenance (Total Rebuild + Bus Availability) 2.9
Para (Scheduling + Consolidation of operations) 1.0
Other 0.6
$10.1
Despite challenges in maintaining operator ranks during a major recruitment drive (twice the applicants and new bilingualism criteria for Operators) labour costs continue to rise as adjustments arising from the Arbitration in January are being introduced progressively and maintenance labour costs are adding pressure as the Total Rebuild of vehicle maintenance includes removal of work backlog from prior years and restructuring costs. Overtime is being used during this transition period. Fundamental changes are being introduced through the workforce to adjust shifts, moving workload between facilities and preparation for 7 day, 24-hr maintenance at 3 locations versus 1 using “Lean” practices.
Diesel contracts are expected to rise from $.85 per litre in the 1st quarter to $.89 per litre in the last quarter for an average contract price of $.87 for the year. Fuel savings from Hybrids are meeting Engineering expectations at over 22% savings however this will not be fully realized until the facility and dispatching assignments are implemented later this year. Last, the diesel variance also reflects the impact of the HST of approximately $325K.
The O-Train operation will be favourable $326K at year end, partially due to diesel price savings and the 5 week shutdown for maintenance. Costs incurred for additional bus service during the shut-down are included as part of the capital project costs and are not reflected in the operations expenditure forecast.
The Facility Operations variance will continue to year end and will be favourable $1.7K. This is mainly due to timing in the handover of the new garage (schedule changes with expanded scope), reduced snow removal and transitway maintenance costs as a result of the mild winter conditions. Additional resources have been deployed in Q2 to improve station cleanliness and remove backlog of maintenance on buildings and operational assets.
Management and Administration continues favourable in the areas of compensation due to timing on filling vacancies, operator training costs, vehicle licence costs, maintenance costs and these variances will carry through to year end.
In Para Transpo, focus on efficiency has permitted increased trips within budgeted expenditures including funds for increased taxi service. Additionally, the move out of Greyhound facilities is expected to realize $200K in fixed cost savings.
[2] Capital Budget
Document 2 provides a listing of the capital program by Department reporting to Transit Committee. The listing identifies the lead department, Ward, financial status (budget versus actual + commitments) and anticipated completion date. The total capital works in progress is $1,352 million, of which $524 million is uncommitted to date. The majority of uncommitted projects are growth projects with completion dates extending beyond 2010. The Technology Roadmap review contains no changes to authorities for 2010 or work in progress, however project scopes have been amended and funds have been reallocated within specific projects to align with the report presented at the July 14, 2010 Transit Committee meeting.
The purpose of this report is administrative in nature and therefore no public consultation is required. All Departments were consulted in the preparation of this report.
There are no legal or risk management impediments to implementing the recommendation in this Report.
As outlined in the report.
None
Document 1 - 2010 June 30 Operating Results Summary
Document 2 – Capital Projects – 2010 2nd Quarter Status Report
Documents 3 and 4 – Budget Adjustments
The results of operations contained in this report will be incorporated in the 2010 Operating Budget Status Report – Q2 - Corporate Status Report, which will be presented to the Audit, Budget and Finance Committee on September 21, 2010.