Translink will come to a very big traffic jam
All public services, including Translink, now have an outline budget for the three years of the current spending review up to 2014-15 and in parallel Translink has an obligation to prepare operational plans to cope with any emerging imbalance.
Using agreed accounting conventions Translink, in 2010-11, was permitted over £60m of grant-aided capital spending. In addition, the group was allocated £70m from public funds, and revenue raised from fares. On average, each fare-paying passenger on a bus journey paid 50p less than full cost . Rail passengers paid £3 less than would be needed to cover costs.
After grant aid of nearly £70m, on a turnover of £185m, the profit and loss account was close to break-even. Consequently, grant aid was the equivalent of 60% of other operating costs.
The problems facing Translink relate both to its operating budget and its investment programme.
Translink has been asked to budget on the assumption that the current account funding in each year from 2011-12 to 2014-15 will be, respectively, £78m, £72m, £64m and £61m. On present policies and with current service levels, this means an emerging deficit starting with a neutral balance in 2011-12 growing to £4.4m, £16.5m and £21m in the next three years.
The argument by Translink is that the minister should persuade the Executive to find extra funds to offset this deficit or the alternative would be a rise in fares or reduced services.
This analysis will be subject to careful examination in the Department for Regional Development.
Extra government funding will be hard to find. Translink is reluctant to increase fares dramatically.
If no other additional funds are available, Translink must find more than £10m in each of 2013-14 and 2014-15. Logic would be to look first for economies and then reduce commitments.
This emerging budget debate will reopen a number of proposals that have attracted varying support.
The Translink corporate plan for the years to 2014-15 points towards possible priorities. Contrary to the message that funding will be reduced, Translink points to the rise in passengers on railway commuter routes and the impact of more new trains.
The development of commuter numbers in greater Belfast and the expansion of numbers on Enterprise services points to an expanded role for Great Victoria Street station.
The downside in planning Translink services is that recurrent operational costs will be even more squeezed.
Also, lesser-used rail services may be reduced or considered for closure.
For bus service economies, some route closures and market testing of selected routes seems logical.
The ambitious 'rapid transit' scheme seems likely to be cut back.
In today's financial climate, the management challenges are increasing.