Cathy McLay, TransLink CFO, answers your questions about the 2013 supplement

Cathy McLay, TransLink CFO, answers your questions about the 2013 supplement

Cathy McLay, TransLink's Chief Financial Officer!
Cathy McLay, TransLink’s Chief Financial Officer!

Earlier this week, we asked readers to submit questions about our 2013 draft supplemental plan and TransLink’s Chief Financial Officer Cathy McLay would provide answers.

We received a few questions, and here they are, along with Cathy’s responses!

[March 11, 2013: These have been updated with answers to all the questions we received.]

How will this supplemental plan impact TransLink’s operations and services?

Through operational efficiencies, and drawing on the cumulative surplus, TransLink is able to deliver the same service in 2013 and 2014 that was identified in the 2013 Base Plan.

What did TransLink do to improve your financial position since October 2012?

We’ve aggressively implemented some efficiencies earlier than planned. For example, shifting from conventional buses to community shuttles in less productive areas to reduce costs, reducing layover times on bus routes, reducing overtime costs, not filling vacancies, restructuring and streamlining operations, and not accessing the contingency fund.

Are you using your contingency reserve to absorb the shortfall in funding?

Even though TransLink has made great progress on improved revenues and cost efficiencies, the supplemental plan relies on drawing $3.3 million of TransLink’s cumulative reserve.

What is TransLink’s overall credit rating? Does the 2013 supplemental plan incorporate any possible downgrades to the organization’s credit rating? I ask about downgrades in the light of the funding difficulties.

TransLink’s credit ratings are AA-Stable with DBRS and AA2-Stable with Moody’s . We do not anticipate a downgrade with either rating agency and our plan is reflective of this. We do not believe that a downgrade would be warranted, as TransLink does not increase services or capital investments unless it has the identified funding to maintain the operating cost or debt repayments for our commitments. Generally speaking, TransLink revenues are diversified (multiple steams of revenue) and are fairly predictable. Our financial policies restrict TransLink to drawing down our reserves to a minimal level in order to weather economic shocks.

Do the numbers for 2013 include the impact of any possible decline in ridership due to the January 1, 2013 fare increases?

The plan includes price elasticity for ridership, which was also included in the 2013 Base Plan.

The trend in future will be to have more service hours through the use of community shuttles rather than conventional vehicles. If the cost per service hour is less with a smaller vehicle, shouldn’t that allow TransLink to operate more service hours overall in the region while keeping costs constant?

We manage to multiple priorities, looking at the best way to provide the committed service at the lowest possible cost, while managing overall risks. If there is a financial surplus, the organization looks to the most cost-effective ways to meet TransLink’s overall mandate.

Some routes are seriously overcrowded right now. Why doesn’t TransLink draw down on its cash reserves to operate more service hours?

Like all businesses, TransLink must manage its risks and be fiscally responsible. The reserves are intended to manage unforeseen economic shocks. However, we are drawing on the reserves in order not to be in a position to cut services.

The UBC and Surrey Rapid Transit studies have just been released. There doesn’t appear to be any financial planning for these future lines. Why is that given ten years of future comparative numbers are provided?

Our plans include only the services for which we have identified and committed funds. Once funding is identified and committed to these projects, our plans would be refreshed to reflect both the revenue commitment and the matching capital and operating expenditures.

If you have any other questions, ask them here in the comments and, as always, we’ll sleuth out the answer for you!

Remember, consultation on the 2013 supplement is open until March 15: give us your feedback on the plan, then we’ll incorporate it and present it to the Mayors’ Council later this month. (It’s up to the mayors then to decide whether to approve or not.)

Thanks again to everyone who participated with their questions!

Author: Tina Robinson