TransLink facing $4.7B cash crunch, report to Mayors’ Council says
Posted October 25, 2023 7:09 am.
Last Updated October 25, 2023 7:48 pm.
TransLink is facing a huge cash crunch.
A report to the Lower Mainland’s Mayors’ Council Wednesday shows that the transit authority is facing a structural deficit of $4.7 billion.
While that loss is a projection, that is the forecasted gap between its planned expenditures and expected revenues if nothing changes in the next few years.
The report notes that the deficit “appeared” at the beginning of the COVID-19 pandemic in 2020, “where a significant decline in ridership resulted in suppressed fare revenue. While ridership has been recovering steadily, TransLink has been facing rapidly growing costs as a result of the inflationary pressures, particularly labour and construction costs.”
It says fare rates and property tax increases were kept lower during that time to “avoid adverse impact on the Region recovering from the pandemic.”
Funding from senior governments’ has helped TransLink over the last three years, however, the report notes that the deficit really “starts becoming apparent in 2026, and grows progressively.”
“For the years 2026 to 2033, based on the scope of 2022 Investment Plan and before any additional scope of the 10-Year Priorities is included, the total funding gap is $4.7 billion. To fill this gap, TransLink would need approximately $600 million per year in new revenues starting in 2026.”
The report notes that the main reasons for the cash gap are inflation, service expansion, and debt servicing costs.
“The largest expense increase is caused by inflation, contributing $839 million to the funding gap. Of this amount, the largest portion ($551 million) is driven by labour rate increases due to negotiated settlements,” the report explained.
“The next highest expense driver is expansion, at $408 million. The addition of Broadway Subway, Surrey Langley Skytrain, and Expo Millennium Line Upgrade projects result in additional costs needed to operate and support the expansion.”
The cost of borrowing money has also increased, as interest rates have steadily gone up since March 2022.
“Debt service costs have increased compared to 2018 Investment Plan, driven by an increase in capital spending. This is partially offset by lower borrowing rates than those assumed in the 2018 Investment Plan. As a result, debt service costs contribute $459 million to the funding gap.”
During the Wednesday meeting, council Chair Brad West said he wants the public to understand the seriousness of the situation.
“The challenge is significant, [the report has] laid out why, and how. And as (City of North Vancouver) Mayor Buchanan just said, an outdated funding model that the Mayors’ Council and previous Mayor’s’ Council and the one before that, and the one before that, and the one before that, have raised as a concern as senior levels of government,” he said.
TransLink is not legislated to run deficits, so if the funding gap isn’t met in time for 2026, the transit provider would have to reduce service on a significant scale — by up to 60 per cent.
Council received the report Wednesday, with actions to address the deficit to come at a later date.
Meanwhile, some transit riders at Olympic Village Station say they’re worried about how this deficit could impact their daily trips.
“We’ll I’m kind of concerned that the price will rise, or there will be less buses,” one told CityNews.
“For myself, who takes SkyTrain all the time, it’s going to make a huge difference to me and I’m sure it will be for a lot of seniors. So, I was kind of hoping they would get this stuff organized,” another added.
“It’s $3.10 for an average rider now of average age and I don’t see people wanting to pay $4 to go one way or whatever. Anyway, I think they’re mismanaging their money. I don’t know how they could get that far in debt.”
-With files from Dean Recksiedler, Kier Junos, and Martin MacMahon