Metrobus subsidy takes a nosedive, but no cuts in service

A review of the City of St. John's 2016 budget numbers reveals a significant decline in the subsidy for Metrobus, but riders should not expect a reduction in services, says general manager Judy Powell.

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Annual subsidies for thecity-owned bus service have been growing steadily through the years, with roughly $15.3 million budgeted for 2015.

That's nearly double what they were a decade ago.

But the 2016 subsidy has dropped to nearly $14.34 million, a decline of more than six per cent.

Will this mean a reduction in services? Will plans to make bus routes in the city more accessible be delayed? Will riders be paying more?

Not at all, said Powell.

She said the drop in subsidy is related to some relief on the pension front.

Pension connection

It's a little complex, but Powellexplained it like this.

Metrobus was granted relief this fall by the provincial government from paying the solvency deficit on the Metrobuspension plan, retroactive to January 2014.

That's largely where the savings comes from.

She said there is no change in the operational budget, and no service cuts.

She explained that when a pension plan is underfunded, there are two deficits: the going concern deficit and the solvency deficit.

The going concern deficit is the amount owing to meet the current obligations to members.

The solvency deficit is the amount of liabilitiesthat would be owing if the plan were were to wind up.

Since there's no likelihood of the pension plan folding,Powell said the province's superintendent of pensions agreed this deficit does not have to be paid.