TransLink will be in a precarious state for the foreseeable future, likely well into 2021, but the exact level and duration of COVID-19’s impact on its fiscal house depends on whether the pandemic changes and how the economy could recover.
Even with all the significant cuts to services and other expenditures to date, with ridership down by 83% and fuel and parking taxes also depressed, the public transit authority will be on target to see revenue losses of $50 million per month this year — down by $25 million from the previous rate of $75 million per month. About 1,500 employees are already in the process of being laid off.
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These are uncharted waters that are being experienced by all public transit authorities across Canada.
But TransLink staff have laid out four plausible scenarios for their operations in 2020, given the expectation that fare and fuel tax revenue will lag for some time.
A “Quick Recovery” scenario that ends physical distancing on Canada Day this year, and is associated with a one-year recession, would lead to a shortfall of $570 million.
The scenario of “Lasting Impacts” that also ends on Canada Day and is accompanied with a four-year depression would would create a hit of $650 million.
The “Hibernation” scenario ends in 12 months and results in a $680 million cut in revenues, accounting for a one-year recession.
The exceptionally dire “Paradigm Shift” scenario would see physical distancing end in 18 months with a 2020 shortfall of $680 million as well, but there would be a four-year depression.
The financial impacts spilling over into 2021 for the four scenarios range between $120 million for “Quick Recovery” and $885 million for “Paradigm Shift.”
For the total financial impact over the full impact periods, the best case scenario will create a shortfall of $710 million, while the worst case scenario could come to a total of $3.25 billion.
The actual realization of any of these scenarios depends on when provincial health authorities begin relaxing the health safety measures, allowing the economy to gradually reopen. There have also been concerns from health authorities the pandemic could return in waves later in 2020 and in 2021. If physical distancing measures are increased even further, the monthly revenue losses could grow to $90 million.
The immediate forthcoming challenge for TransLink is its need to find emergency operational funding from the federal and provincial governments to avoid the need to reduce service levels even further during the pandemic.
There are currently 150,000 unique riders on the transit system, equivalent to about 75,000 people per day. Based on a recent TransLink survey, eight in 10 of these riders are making essential trips, four in 10 are essential workers, and one in 10 are current users who do not have any options to get to and from work.
With the latest service reductions and the physical distancing measures, especially on buses, the transit system is operating at just 18% of its normal capacity.
“We must continue to explore deeper service cut options if financial aid is not forthcoming and if the pandemic changes the nature of demand on the system,” said Geoff Cross, vice-president of transportation planning and policy at TransLink, during today’s virtual Mayors’ Council meeting.
TransLink also needs funding to restore service levels to help support the reopening of the economy and the return of people going to their place of work.
It is aiming to restore service levels to 90% normal as early as September and as late as December, when schools and more areas of the economy — including restaurants — could be open. Trips created by post-secondary students account for 15% of ridership.
All three levels of government are discussing ways to bail out public transit, with the provincial government indicating it will help restore service levels in September. The Mayors’ Council and the provincial government are also seeking federal assistance, especially for the interluding period over the spring and summer months.
But in order to adequately prepare for the return of service levels, especially with rehiring bus drivers, TransLink needs some funding assurances by June.
“We do know that recovery will start as soon as provincial authorities provide guidance on how physical distancing measures will be eased. This will happen in layers. Understanding those layers and the sequences will provide guidance on what kind of supply is necessary,” continued Cross.
“We don’t know how long the recovery will be. It could be many months, depending on the depth of the recession and speed of the economic recovery. We also need to think about what we’re rebuilding to, think about what we have from a financial capacity, think about how do we support our economy, and what the demands will be on our system.”
With physical distancing being practiced, especially on buses where only 50% of the seats can be filled and standing capacity is banned, TransLink is struggling to meet demand on many routes given the high cost of such operations. On these routes, there are instances of long lines and multiple pass ups.
In some cases, on routes where there are near-zero riders, decisions have been made to either reduce frequency or suspend the service.
Overall, physical distancing requirements alone that help protect both staff and passengers have reduced the transit system’s capacity by 70%.
“The whole point about this is to try to make sure we’re meeting the majority of essential trips that are out there that does not cause too much convenience to the point that people are unable to make them,” Cross said.
“The function is to make sure people can make the trip they want to in a reasonable timeframe and without too much inconvenience.”
When asked about whether reinstating bus fares would help narrow the fiscal gap, Cross said many bus riders are still paying. A large proportion of those still riding public transit have a pass — monthly pass or the province’s BC Pass for the elderly and individuals with disabilities — or are transferring to SkyTrain and SeaBus, where fares are still in place.
Under the advice of the provincial health officer, both TransLink and BC Transit suspended the practice of fare collection on buses to allow for a rear-door boarding policy that provides physical distancing between the bus driver and passengers.
On the matter of the multi-billion dollar expansion and improvement projects that were planned, including SkyTrain extensions to Arbutus and Fleetwood, TransLink staff were hesitant to state these projects would definitely be protected.
According to the provincial government, construction on the Millennium Line’s Broadway Extension is scheduled to begin at the end of 2020. TransLink is also planning to commence construction on the Expo Line’s Fraser Highway Extension to at least Fleetwood in early 2022.
TransLink has already tapped into its financial capacity for capital projects to ease its fiscal crisis. It has made debt-service savings from deferring some unspecified projects, and deferred transfers to municipal governments for the 2020 Major Road Network operations and maintenance. It is drawing on critical reserves that would otherwise be used for investment plans.
Cross says TransLink is analyzing the medium-term demand forecast from not only the economic recovery but how the public’s behaviour may have changed as a result of the pandemic.
“If we’re in an economic recovery that is quite quick, our more optimistic end is losing a year or two of ridership growth we would’ve seen. If it’s on the flip side, it could have longer lasting impacts. In between that, at least during the recovery period, people’s travel periods will change,” he said, noting there will be “some inertia on coming back to transit.”
The public is changing how they are making their trips, he says, as they are walking and using their car more.
He believes the public’s tolerance for crowding or overcrowding on the system may also be lower moving forward.
“Understanding the need from that perspective could change how quickly we need to roll out some capital projects, it may hasten the need for more space on the system. But then we need to layer in on whether we have the financial capacity to deliver the track we were thinking,” said Cross.
Over the longer term, considerations will need to be made on how the pandemic may have changed workplace behaviour, as there is the potential that it could permanently shift certain jobs from offices to homes.
Demand aside, there have been some positive signals from the federal government that they may accelerate public transit infrastructure spending as an economic stimulus. This could help ensure the SkyTrain expansions are built, while also accelerating other projects.
“This region is still destined to grow and thrive, and we do believe that TransLink and the many services it provides and support have to be an integral part to the future growth, economic prosperity, and quality of life,” said TransLink CEO Kevin Desmond.
“Those goals and aspirations that we had prior to this crisis, I don’t believe they’re going to change. Maybe how we operate and produce many of our tools and services, maybe those will change and evolve, but we will still need a strong place in this community.”