Public transportation | The STM will cap the growth of its expenses until 2029

The Société de transport de Montréal (STM) is committed to capping the growth of its expenses at 3%, each year, until 2029, a new financial “optimization measure” which allows it to tighten its belt without however reduce the level of service.

This is what we learn in a document which will be presented this Monday before the Commission on Finance and Administration of the City. This week, it begins to hear from different organizations as part of the consultation on metropolitan financing of public transportation, an exercise where heartbreaking choices will be submitted to Montrealers and which must culminate on June 14 with the adoption of recommendations.

Read the article “Funding public transportation: heartbreaking choices presented to Montrealers”

“Three percent is a reference base that we set for constant supply, but we hope that by then, the level of service will have increased. Currently, I do not even have confirmation of the offer that I must give in seven months, and even less in five years,” says STM president, Éric Alan Caldwell.

He thus refers to the uncertainty surrounding the negotiations between the mayors and the Minister of Transport, Geneviève Guilbault, which are still at an impasse despite two meetings in one month. Quebec intends a priori to fill 70% of the “cyclical” deficit of transport companies, or around 200 million, while the shortfall is 565 million for 2025 only.

At the end of 2023, the STM had already announced to reduce its spending by 86 million to avoid the worst, namely cuts in service. The payroll was notably reduced by 5%, for a gain of around 25 million, and the budget for goods and services, notably communication campaigns, was reduced by 2%. The budget for certain “special projects”, such as the replacement of AZUR trains, has also been revised downwards.

All this allowed the Montreal carrier to limit the increase in its expenses to 5% in 2023. This year, it plans an even smaller increase, oscillating between 1 and 2%. In 2025, and until 2029, the proportion of increase in these expenses will never exceed 3%. The transport company has already committed to a “plan to reduce recurring expenses by 100 million over five years”.

Refocusing the debate on income

If it is “fundamental”, financial optimization “is not the solution to the current deficit”, believes Mr. Caldwell.

In addition to an increase in the registration tax, which seems more imminent than ever, the STM will plead before the commission the urgency of increasing new sources of financing “dedicated and inspired by eco-fiscality”. “Mileage tax, parking tax, congestion toll” are all options that should be put in place, reads the company’s brief, which argues that “the financial framework cannot depend so much on government subsidies and municipal”.

The example of Vancouver, where TransLink draws revenue from a parking tax, an electricity tax and development fees, “should inspire the Legault government,” according to the president of the STM.

Finally, the use of “the funds associated with the rebate on the purchase of electric vehicles would be an opportunity to temporarily increase revenues linked to public transport by 200 million”, affirms the company, which also demands, like the City of Montreal, to index the gas tax and the registration fee.

The STM also reiterates its request to obtain the right to carry out real estate projects with developers around metro stations, in order to generate more revenue. This is similar to the model adopted by the Réseau express métropolitain. The latter, the president notes in passing, will receive more and more operating subsidies over the years, at a much higher rate than his group, which makes him fear “government disinvestment in traditional companies”.

Only with the extension of the blue line to Anjou, the company estimates that it could generate 310 million in revenue linked to real estate development and thus “reduce the project bill”. “We need to be able to give ourselves this maturity that many other jurisdictions already have,” concludes Mr. Caldwell.