TransLink Efficiency Review Reduces Structural Deficit By $91 Million - No Cuts to Transit Service

In December last year, TransLink’s Mayors’ Council requested an efficiency review of the organization. A combination of declining fuel tax revenue and changes in transit ridership patterns means that even though more people are taking transit than ever before, TransLink has a significant funding gap. If the gap isn’t plugged, not only will TransLink not be able to expand its service, but starting in 2026, TransLink will need to cut about half its service. I believe most of our region’s mayors do not want to see these cuts.

For clarity, starting in 2026, TransLink will have an average annual revenue shortfall of $670 million. In 2023, TransLink had $2.6 billion in revenue.

Given the significant funding gap, I supported an efficiency review of TransLink because if we are going to be asking our residents and businesses to increase property tax to pay for transit, ask the province for a new funding source to replace the declining fuel tax, and ask the province and federal governments for significantly more money to pay for needed transit expansion, we better make sure that the TransLink house is in order.

TransLink commissioned Ernst & Young LLP to complete an efficiency review. While the report was interesting, TransLink’s management response to the review was more meaningful. They approached finding new revenue and cost savings in a way that would not impact the delivery of transit service in Metro Vancouver or the customer experience.

They reduced the annual revenue shortfall by $91 million to $579 million.

$91 million in annual cost savings by area. Select the chart to enlarge.

$16 million is from increasing revenue by reducing fare evasion ($5m), optimizing investment income ($7m), and increasing commercial and carbon credit revenue ($4.5m). Commercial revenue includes retail space leases at SkyTrain stations.

TransLink management will be reducing costs by $74.7 million. The most significant cost savings of $40 million will come from restructuring TransLink’s debt.

$20 million in cost savings will be achieved by streamlining administrative processes, saving on information technology, discontinuing some non-core programs, and optimizing bus service (without impacting the actual delivery of service).

TransLink will achieve $15.3 million in cost savings by eliminating vacant positions that aren’t directly tied to transit service delivery. TransLink will also reduce its reliance on external consultants and contractors by in-housing roles.

I believe that these changes will put TransLink in a solid position as we work to close the funding gap and increase much-needed transit and transportation investments in Metro Vancouver.