Staff Report #4
September 30, 2020
To All Commissioners
Re: Advocacy Update
That the report be NOTED and FILED.
Since the onset of the COVID-19 pandemic in Canada, both the Federal and Provincial levels of government have made clear through commentary and emergency orders, that public transit services are considered essential in order to keep communities moving, and to continue to provide transportation for essential workers as well as customers that rely on public transit for access to the community.
The following provides an overview of the status of each of the funding programs that have been announced as well as commentary with respect to the need for ongoing advocacy.
Province of Ontario – Municipal Transit Enhanced Cleaning Program
On June 29, 2020, the Province of Ontario announced a program that will provide $15 million in funding to municipalities across the province to support the enhanced cleaning of their public transit systems and help reduce the spread of COVID-19. The funding envelope was allocated to every jurisdiction that provides public transit, with the City of London allocation being up to $433,025. The following details with respect to this program have been confirmed:
- funding includes a one-time allocation, intended to offset costs associated with enhanced cleaning requirements during the initial period of the pandemic declaration;
- the allocation provided is a maximum amount that can be claimed against, noting actual paid invoices for purchases meeting the criteria for spending must be submitted to support the claim;
- eligible expenditures will be limited to those directly relating to cleaning of buses and facilities;
- eligible expenditures need to have been incurred between April 1, 2020 and December 31, 2020; and
- proof of expenditure must be submitted to the Province for reimbursement up to the total allocation received.
Transfer payment agreements are currently in the process of being completed by the Ministry of Transportation for execution by the municipality. Over the coming month, administration will assess options to implement a sustainable cleaning program going forward, noting that new equipment related to cleaning are considered eligible expenditures. It is anticipated that any recommendations with respect to cleaning equipment will be tabled at the October meeting noting the deadline for expenditures to be funded under this program is December 31, 2020.
Federal/Provincial/Territorial Safe Restart Program
An agreement between senior levels of government has been reached for the Safe Restart Program, which includes $19 billion in new Federal funding. The program includes seven funding envelopes, with one specific to transit which includes a dedicated envelope for public transit of $2 billion made up of matching $1 billion contributions from both the Federal and Provincial governments.
On August 12, 2020, the Province announced the first phase of the funding for transit, allocating a total of $666 million to transit systems across the Province. The allocation was based on 2018 ridership, and resulted in an allocation of $18,523,658 for London Transit. The following bullets provide an overview of the details with respect to this phase of the program:
- Financial pressures that are eligible for reimbursement under this program include both financial pressures associated with the need to continue to operate with reduced revenue and new expenses resulting from COVID-19.
- Reduced revenue includes pressures related to farebox, advertising, parking, and contracts (i.e. school charters)
- New expenses incurred in response to the COVID-19 outbreak would include cleaning costs, new contracts, labour costs, driver protection, passenger protection and other capital costs
- The Phase I allocation is intended to cover COVID-related budget pressures for the period of April 1, 2020 through September 30, 2020
- Any funds that are not utilized for this period are to be placed into a reserve for use in covering budget shortfalls relating to COVID-19 up to and including March 31, 2021
- A reporting form, setting out budget impacts and use of funds up to September 30, 2020, as well as projected impacts through to March 31, 2021 must be submitted to the Province no later than October 30, 2020.
- Any Phase II allocations will be based on the October report, and will require a Transfer Payment Agreement (TPA) to be executed, which will include the requirement for municipalities to demonstrate their participation and progress in the following areas:
- Engage in consolidated procurement opportunities leveraging Metrolinx and other provincial procurement tools (all municipalities)
- Review the lowest performing bus routes and consider whether they may be better serviced by microtransit (all municipalities)
- Work with the Province and Metrolinx where appropriate to determine the feasibility of implementing microtransit options on viable routes (all municipalities)
- Participate in discussions with the Province on advancing fare and service integration (GTHA and select municipalities)
- Participate in discussions with the Province to optimize transit through new possible governance structures (GTHA and select municipalities)
During the week of September 21, 2020 OPTA held two conference calls in cooperation with the Ministry of Transportation which were open to all municipalities who were in receipt of Safe Restart Funding. The calls were well attended, with over 150 participants, and provided the opportunity for ministry staff to provide an overview of the status to date of the eligible expenditures and the submission form relating specifically to the Phase I funding. It is anticipated that minor adjustments will be made to the final documents in response to the questions and comments raised on the calls, and final forms will be provided to municipalities in the coming weeks. Discussions with respect to the Phase II requirements as set out above, are anticipated to begin in October, subsequent to the finalization of the Phase I reporting requirements.
On September 24, 2020, confirmation was received from the Ministry of Transportation that the $18,523,658 allocation for Phase I has been approved for transfer. Administration has been in contact with civic administration to arrange for transfer of the funds and deposit into a separate reserve account as per the program guidelines.
A report outlining the makeup of the submission form that is required under this program will be provided to the Commission at the October 28, 2020 meeting. This report will also include the projected impacts of COVID through to the end of this funding program (March 31, 2021) and the impacts on the 2021 operating budget.
Throughout the pandemic period there has been no question as to the need for public transit to continue to operate in order for communities to continue to function. What will be imperative going forward is that this fact is not lost on decision makers at all levels. There is no question that the pandemic will continue to affect budgets going forward, and difficult decisions will need to be made.
While the aforementioned programs are both welcomed, and will provide significant relief with respect to the budget concerns relating to the pandemic, they will not solve the budgetary issues projected for 2021. The Safe Restart Program funding for transit expires on March 31, 2021, leaving the remainder of the budget year in jeopardy. Both CUTA, at the Federal level, and OPTA at the Provincial level are continuing discussions with respect to the anticipated longer-term impacts of the pandemic on public transit services, noting the manner in which they traditionally operate, and are funded, may not be feasible for some time, and as such, continued relief will be required.
In London, investments in transit over the past number of years have allowed the service to grow and respond to longstanding customer requests. The theme of the 2019-2022 Business Plan is “Maintaining the Momentum”, and while the pandemic has resulted in a number of significant speed bumps, it will be imperative that every effort is made to continue on the path defined in the Business Plan in order to ensure that Londoner’s don’t experience a downward spiral the likes of which occurred in the 1990’s and took over 10 years to recover from. Responding to the impacts resulting from COVID will require participation from all levels of government.
On September 11, 2020, CUTA released a report titled “Public Transit and a Green, Inclusive Recovery” (see Enclosure I). The report was completed with input from a number of stakeholders, and highlights the critical role public transit systems across Canada in fostering social equity and advancing environmental sustainability objectives as communities recover from COVID.
The report makes a number of recommendations that align with the need for ongoing commitment from the federal government for relief funding relating the COVID impacts as well as existing priorities in the LTC 2019-2022 Business Plan including the need for federal capital investment in the move to a greener transit fleet. CUTA will continue to advocate on the issues identified in this report, noting progress with respect to ongoing operating relief will be imperative in order to provide systems with the financial sustainability required to navigate their way through and out of this pandemic in a manner that doesn’t result in irreparable impacts to service and ridership levels.
In addition to the budgetary concerns relating to the pandemic impacts, another significant issue on the horizon relates to the Provincial Gas Tax for Transit Program. The program distributes $0.02 for every litre of fuel purchased in the previous year to transit systems based on a formula of ridership and population. The most recent allocation totaled $365 million in total, with London’s allocation being approximately $10.7 million (approximately 3% of the total based on a combination of ridership and population). Given the extended period of lock-down and business closure experienced during the pandemic period in 2020, it is reasonable to believe that much less gasoline was sold, and as such, the pot of funding for the next distribution period will be much less. The multi-year base operating budget that has been approved by municipal council included reliance on Provincial Gas Tax funding to offset operating costs, based on the assumption that annual allocations would continue to be close to the $10.7 million allocation for 2019/20. This assumption is consistent for transit systems province wide, and as such, has the potential to create another significant shortfall going forward. OPTA has begun dialogue with the Ministry of Transportation with respect to this issue in an effort to determine a path forward. This will continue to be a focus of discussion in the coming months.
Kelly S. Paleczny, General Manager