New low-income discounted TransLink fares could cost $70M per year

TransLink estimates new low-income discounted fares could cost $70 million annually

TransLink's Compass Card. (Mitch Hutchinson/Shutterstock)

Should discounted Metro Vancouver public transit fare programs for low-income individuals be further expanded?

TransLink believes there should be expanded programs to provide more discounted fares to more people based on their real need.

But this would depend on receiving more operating subsidy funding from the Government of British Columbia, as TransLink does not have the financial capacity to cover such high ongoing costs.

The Mayors’ Council is being recommended by TransLink staff to include low-income fare discounts in the forthcoming Mayors’ Council policy platform — a list of recommended policies to the provincial parties for their inclusion in their campaign platforms ahead of the October 2024 general provincial election.

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According to TransLink staff, they estimate such an expanded discounted fare program for all low-income adults under the Low Income Measure (LIM) would cost between $60 million and $70 million per year. It would offer “significant” fare discounts to nearly 43,000 existing low-income transit users across Metro Vancouver, with LIM based on classifying households as low income if their income is below 50% of median household incomes.

A similar program by Calgary Transit funded by the Government of Alberta provides discounted monthly transit passes for $5.80, $40.25 or $57.50, depending on the income level and household size — well below the normal $115 per month cost of an adult monthly pass.

“Such a program would need to be made cost-neutral to TransLink — given that poverty reduction and income redistribution are objectives most appropriately funded by senior governments who both have this mandate and who have access to the most progressive revenue tools best suited to the task,” state TransLink staff.

This would be in addition to the recent implementation of free fares for youth ages 12 and under for both TransLink and BC Transit. When this program was first launched in 2021, the provincial government made it possible by providing a $26 million annual operating subsidy to cover the reduced fare revenues of both public transit authorities.

It would also be on top of the existing discounted fare programs of the BC Bus Pass for low-income seniors and people with disabilities, and the U-Pass BC for post-secondary students, as well as concession fares for youth under 19 and seniors 65 and over.

This new recommendation for expanded discounted fares for low-income individuals follows the rejection by TransLink and the Mayors’ Council in 2023 to provide free fares for the remaining youth ages between 13 and 18, which was previously formally suggested by some municipal governments and organizations.

It is estimated free fares for ages 13 to 18 would cost $30 million per year due to reduced fare revenue. If fares were also free for seniors 65 and over, it would cost another $30 million to $40 million annually. All the while, there would be higher operating costs from increased ridership demand, as well as the likelihood of a significant rise in fare evasion and program misuse, which was experienced by the Toronto Transit Commission as a direct result of a similar program.

Moreover, according to TransLink staff, an individual’s age does not best represent their ability to pay — with many youth supported by wealthy parents and many seniors having significant wealth — and fare-free public transit typically comes at the expense of active transportation.

“Fares should be linked to ability to pay. Transport 2050 sets policy direction that transportation fares and fees should be linked to a person’s ability to pay, where ‘users with the lowest incomes and wealth should pay a very low discounted fare or fee, and users with higher incomes and wealth should pay the full fare or fee.’ This is an important consideration in exploring age-based discounts, as age and income or wealth are not directly correlated,” state TransLink staff.

“Fares, even at a nominal charge, help to allocate the scarce resource that is public transit service. In cities that have experimented with fare-free public transit, ridership has indeed increased, but almost entirely at the expense of walking, cycling and carpooling.”

Fares are TransLink’s largest revenue source towards covering cost of operating and maintaining the public transit network, with $493 million in fare revenue recorded in 2023 — ahead of $463 million from property tax revenue, $391 million from gas tax revenue, and $84 million from parking tax revenue. With the growing use of battery-electric and fuel-economy vehicles, gas tax revenues are currently on the decline.

In 2023, Compass Card stored value — such as for single-trip fare payments — accounted for 44% of fare revenue, followed by 38% from monthly passes, 15% from cash fares for single-trip fares, and 3% from the daypass.

This recommendation for an expanded discounted fare program comes at a time when TransLink and the Mayors’ Council are facing competing priorities, and presenting competing funding requests to the provincial and federal governments.

The $20 billion public transit expansion and improvement plan over 10 years starting in 2025 remains unfunded, and significant additional funding is needed for TransLink’s ambitious strategy to transition its bus fleet to battery-electric models.

TransLink is also facing a fiscal cliff after 2025 when an existing operating subsidy from the provincial government runs out. The public transit authority is forecasting a cumulative shortfall of $4.7 billion between 2026 and 2033, starting with about $600 million for the 2026 fiscal year.

If this fiscal gap is not addressed, TransLink could potentially be forced to perform significant cuts to public transit service levels.

Last month, due to the fiscal cliff and the need to protect its core mandate, TransLink indicated its annual funding program to municipal governments for building and improving roads, bike lanes, pedestrian paths, and other active transportation infrastructure could end after 2025. Since the program was launched in 2017, the program has provided municipal governments across the region with a combined total of $887 million towards 733 projects.

Through 2026, there will be slightly higher annual fare increases as a stop-gap measure to fund increased public transit service levels as an immediate measure to address growing overcrowding issues. This includes this year’s fare increase on Canada Day, July 1, 2024.

Over the longer term, if the Compass Card system receives a major technological upgrade, TransLink could discontinue the existing zone-based system for SkyTrain and SeaBus and replace it with a distance-travelled fare system, which could reduce the cost for some shorter trips currently near the zone boundaries. The upgrade could also enable TransLink to introduce new fare products that could offer more flexible fare options.

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