For the past year, Toronto’s transit advocacy and hand-wringing focused on a planned order of new subway trains for Line 2 Bloor-Danforth. The City committed its share of funding through special transit taxes, and Ontario came in with the proviso that the Federal government pony up too.
For their part, the Feds dragged their heels not just on the subway cars, but on transit funding generally. They announced a $30-billion, ten-year national program, but money will not flow until 2026. Toronto’s subway car order will draw its federal share from that pot.
One of Toronto’s many problems is solved, but Canada still faces a Federal program inadequate compared to the backlog of national needs, not to mention the dubious future of a government that may be out of office before many dollars flow to local transit systems.
Lost in all of this is a nation-wide crisis in funding for transit operations and maintenance, money that is needed today. Since 2020, special subsidies at all levels masked the severity of the problem to keep transit afloat for pandemic-era mobility and economic support. Those subsidies are ending, and transit systems are back to the problem of finding the next dollar to operate their services.
This is the boring stuff with few photo-ops, but a huge impact on making transit an alternative to driving, or not traveling at all. Money is needed to pay operators and mechanics to drive and repair buses, and to run enough of them that service is attractive and comfortable. Low cost transit is useless if it shows up infrequently and unreliably.
The situation is compounded by inflation in labour and materials costs, and revenue losses from ridership decline and fare freezes. Actions to keep transit operating as a credible, useful mode of transport through the pandemic were necessary and laudable, but the fiscal landscape has changed and cities are hard-pressed to sustain their systems as the special subsidies evaporate.
Many transit systems face perilous service cuts if they do not obtain sustained, improved operating subsidies, but the political situation in many governments is not exactly pro-transit. There are big bucks for construction of new routes and major upgrades, but running better transit today is quite another matter.
Global News recently produced a series of reports on this problem looking at several cities in detail. The consultancy Leading Mobility published This is the End of the Line in May 2024 reviewing operating budget funding and potential revenue tools in several cities.
Just getting “back to normal” with added funding is not enough with transit’s key role in supporting economic, population and environmental change.
For many Canadian transit agencies, new revenue tools alone will not be able to meet the growing fiscal challenges for transit operations. Each level of government has mandates, plans and policies related to climate action, population growth and immigration, equity, economic development and affordability that will significantly rely on useful, reliable and convenient transit service. [This is the End of the Line, p. i]
We tend to forget that the pre-pandemic TTC had severe problems with crowding that were not addressed by penny-pinching budgets. Creeping back to 2019 demand levels a few per cent each year will not address capacity problems transit faced five years ago, let alone the need for more transit, better connected communities and transit as a welcomed first choice for travel. The problem is compounded by a misleading TTC metric of service recovery that overstates how close to “the old days” we actually are. See:
The revenue tools proposed by Leading Mobility for major Canadian cities are based on some aspect of vehicle ownership or use, although several others were reviewed. Note that this would cover only the municipal portion of transit funding with operating contributions still required from other governments.
- Vehicle levies
- Off-street parking taxes
- Vehicle kilometres traveled tax
A basic problem with vehicle-based revenues is the underlying premise that road users should pay for transit, and that new levies would divert travel from private cars to public buses and trains. This assumes that the transit network actually would serve the demand now handled by autos. However, Toronto’s system, as an example, grew primarily to serve commuting trips to the core area, and planning abandoned much travel to and between suburbs to cars. The dispersed nature of suburban residential and work locations makes transit provision much more difficult.
So-called business cases for major transit projects use the imputed value of time saved by commuters who would fly past traffic congestion on new lines. This is often the primary positive value in evaluations, and it strongly underpins building the fastest possible routes, sometimes at great cost. By contrast, the disincentive of a poor transit network is rarely discussed when the real political goal is to minimize subsidies by limiting service. Nobody talks about the cost of time wasted waiting for the Dufferin bus.
Toronto Budget History
Problems with ridership and revenue began before the pandemic in part thanks to political decisions to limit transit subsidy growth and keep property taxes down. The TTC Board never discussed this effect, and indeed rarely talked about budgets at all except in the most superficial terms. In 2019, the last full pre-pandemic year, ridership growth was stagnant. Revenue per trip actually grew in 2020 because fewer rides were taken at a monthly pass discount, but revenue per vehicle kilometer dropped because ridership fell by over half while service was maintained thanks to special subsidies. Revenue per kilometre had already started to fall before the pandemic from a high in 2017.
Total service operated in 2023, measured in vehicle kilometres, sits at roughly the 2014 level. TTC reports service recovery on the basis of service hours, but thanks to congestion and slower overall operating speeds, 100 service hours today provides less actual service than 100 hours did 10 years ago.
| Year | Revenue ($M) | Trips (M) | Revenue/Trip | Veh. Km (M) | Revenue/Km |
|---|---|---|---|---|---|
| 2023 | $1,019.3 | 396.3 | $2.57 | 229.5 | $4.44 |
| 2022 | $789.2 | 318.8 | $2.48 | 230.3 | $3.43 |
| 2021 | $513.4 | 197.8 | $2.60 | 225.0 | $2.28 |
| 2020 | $583.7 | 225.0 | $2.59 | 229.7 | $2.54 |
| 2019 | $1,253.9 | 525.5 | $2.39 | 254.0 | $4.94 |
| 2018 | $1,226.2 | 521.4 | $2.35 | 250.6 | $4.89 |
| 2017 | $1,234.5 | 533.2 | $2.32 | 239.8 | $5.15 |
| 2016 | $1,196.3 | 538.1 | $2.22 | 238.2 | $5.02 |
| 2015 | $1,179.1 | 537.6 | $2.19 | 231.1 | $5.10 |
| 2014 | $1,157.5 | 534.8 | $2.16 | 228.4 | $5.07 |
A comparison of the TTC 2020 and 2024 budgets shows the evolution over the pandemic era. The 2020 budget was based on pre-covid conditions although, of course, the actual outcome for the year was much different.
Total revenue (excluding City subsidy) in 2024 is expected to be about the same as the original plan for 2020, but this is only thanks to about $240 million in special provincial subsidy and a much larger reserve draw. Most other revenue sources, especially fares, are down from 2020’s expected level.
On the expense side, the budget structure for the major operations branches has changed since 2020, and so the relevant lines are shown separately for each year.
Total expenses are up by 21% with notable jumps in areas outside of direct service delivery. Security-related costs are not broken out, and so we cannot see how much this has added to the overall cost of providing transit service since 2020.
Note that the figures below are as they appear in the budgets without any inflation. The items have been reordered to show the most prominent first, and to group related lines together.
| ($ millions) | 2020 (Original) | 2024 (Original) |
|---|---|---|
| Revenue | ||
| Fares | $1,246.2 | $998.2 |
| Advertising | $29.5 | $26.0 |
| Rent | $13.3 | $11.9 |
| Parking | $11.6 | $7.5 |
| Other | $34.7 | $43.4 |
| Sub-Total | $1,335.3 | $1,087.0 |
| Provincial New Deal | $175.3 | |
| Reserve Draw | $9.3 | $66.5 |
| Total Revenue | $1,344.6 | $1,328.8 |
| Expenses | ||
| Operations | $669.5 | |
| Vehicles | $297.2 | |
| Infrastructure & Engineering | $167.0 | |
| Transportation & Vehicles | $985.5 | |
| Operations & Infrastructure | $314.6 | |
| People Group (HR) | $97.3 | $48.3 |
| Strategy & Customer Experience | $23.2 | $87.8 |
| Corporate Services | $103.3 | |
| Employee Benefits | $331.1 | $462.3 |
| Fuel | $85.6 | $101.1 |
| Traction Power | $60.4 | $51.2 |
| Utilities | $29.4 | $33.0 |
| Presto Commissions | $54.2 | $44.4 |
| Other Expenses | $172.3 | $172.9 |
| Total Expenses | $1,987.2 | $2,404.4 |
| Subsidy Required | $642.6 | $1,075.6 |
Note that with the Provincial “New Deal” money counted as revenue, the total subsidy would be $1,250.9 million.
Within the municipal subsidy, $93-million comes from provincial gas tax transferred to Toronto. This amount has not changed in many years.
Toronto is particularly vulnerable to revenue loss from fares because a large proportion, 62.7%, came from this source pre-pandemic.
The projected values for 2024 are different from the budget in part because Lines 5 and 6 have not opened as planned, although more service hours have been operated. Note that the total operating subsidy will be higher than the fare revenue.
| ($ millions) | 2024 Budget | 2024 Probable |
|---|---|---|
| Revenue | ||
| Conventional system | $997.7 | $1,025.1 |
| Wheel-Trans | $7.3 | $7.9 |
| Ancillary Revenue | $91.0 | $93.1 |
| Provincial Funding | $175.3 | $114.8 |
| Subtotal | $1,271.4 | $1,240.9 |
| Reserve Draws | $66.3 | $42.1 |
| Total Revenue | $1,337.6 | $1,283.0 |
| Expenditures | ||
| Conventional system | $2,452.7 | $2,360.6 |
| Wheel-Trans | $165.7 | $167.3 |
| Subtotal | $2,618.4 | $2,527.9 |
| Reserve contributions | $20.3 | $20.3 |
| Total Expenditures | $2,838.7 | $2,548.2 |
| Funding Required | $1,301.0 | $1,265.2 |
The subsidy allocated to the TTC by the City of Toronto for 2025 budget planning purposes has not been announced, but the amount is unlikely to be much larger, if at all, from the 2024 number. This does not prevent costs from going up especially if more service will be operated. A fare increase, if one comes, will contribute something, but not a vast amount. The table below shows the effect of various increases without adjusting for elasticity (the effect of losing riders through higher pricing).
| Adult Fare | Revenue ($M) | |
|---|---|---|
| Existing | $3.30 | $1,033 |
| 10 cent increase (3%) | $3.40 | $1,064 |
| 20 cent increase (6%) | $3.50 | $1,096 |
| 30 cent increase (9%) | $3.60 | $1,127 |
What we do not know is the degree to which service quality and crowding will interact with the perceived “value for money” of transit fares to discourage ridership growth. New riders mean more revenue above the amount from higher fares on existing rides, but the system has to attract them. Improved service has a cost, although its benefit in making transit more attractive is rarely quantified.
An outstanding issue is the restoration of service standards to pre-pandemic levels with only seated loads, or a modest number of standees outside of the peak periods. The cost of this has not been provided to the Board for debate among competing demands including fare freezes and concessions, and improved maintenance of vehicles and infrastructure.
The TTC’s 2025 Budget will be debated at the January 8, 2025 Board meeting, although it will likely be published in advance. We will see whether the Board is asked to endorse a business as usual approach with only modest changes from 2024, of if there is a sense of advocacy for added spending on many aspects of the transit system.
Steve Munro 
So if money is so tight, why is TTC replacing rather than refurbishing the Line 2 fleet? Surely the Federal and Provincial governments would agree to provide the money instead for CBTC and Platform doors, which can also be made in Canada and which would give real service benefits (and higher revenues, and O&M cost savings).
Steve: The existing fleet cannot be retrofitted for ATC, and in any event a refurbishment would only defer the problem along with the risk of a less reliable fleet. We also have a problem with fleet size. There are barely enough trains to operate Line 2 including the Scarborough extension which, btw, will be built with block signals because Metrolinx did not include ATC in the contract. No trains for the Yonge North extension. Trains for both of these are required before a T1 life extension would expire. Also no trains for service expansion on lines 1 or 2.
The ATC/CBTC project is $881.1 million with 31% unfunded.
As for platform doors, there is supposed to be a study coming to the TTC Board soon, but the last time an estimate was published in the 2024 Capital Budget they stood at $4.1 billion. Even if this can be “engineered down”, it’s not a trivial amount. On top of that, there is a long list of much-needed capital repairs, and if new money is to surface, they need to be considered first.
Federal spending plans for transit nationally are woefully short of many systems’ needs, not just Toronto, and we are likely to see further retrenchment if the Tories form a new government in 2025. We have to choose carefully what we spend available money for. You may argue (and I believe have done so in the past) that the T1s should be rebuilt. I do not agree. We are already in a crunch for deferral of getting a new fleet and signals, and it is not clear that current plans will carry us through the next decade, especially if we want to attract significantly more riders to transit, the “higher revenues” of which you speak.
As for spending in Canada, as you well know the electronics industry, including signalling systems, is not based here and a substantial chunk of the non-labour cost of ATC will go overseas no matter who gets the contract. Maybe you could get Metrolinx to reveal the cost and source breakdown of ATC and PEDs for the Crosstown and Ontario lines to prove me wrong.
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TTC should make frequent and reliable subway service top priority. This would attract more riders. No matter how they have to get to the subways (except other TTC connections), they have to pay to get on. Getting across the city fast by subway would ease some congestion and appeal to both urban and suburban users.
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Is that why the contract won’t be awarded until 2026, even though funding is *finally* secured now before 2025, and it’s already set in stone that the order will go to Thunder Bay?
Steve: The spending on the subway cars reaches over several years. In the early period, they will use City and Provincial money, and in later years draw from the Feds. The main concern was to get a contract with the Federal government in place so that the TTC would be sure the money would be available when needed.
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The provincial government has provided funding but the federal government has been dragging their heels. Thankfully a federal election is coming soon and we will keep this in mind, thank you for keeping us voters informed.
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Steve – That’s TTC management’s story, but you should dig deeper.
They claim “you can’t fit new signalling to old trains”. This is nonsense. London, Paris, Montreal have all installed CBTC on old trains. And they ALL keep their trains running for 50 years.
As for platform doors, the high price is because TTC has picked the highest price option to consider – full height doors which require massive consequential changes to platform structures and ventilation. Paris has retrofitted platform doors to two of its oldest lines – Line 1 and Line 4, both actually busier and more complicated than Toronto’s subway. Both now running with 40 tph, CBTC, driverless. Line 4 was actually modernised with trains cascaded from Line 1, that were already 25 years old! Tokyo has also retrofitted platform doors to several lines.
But TTC won’t consider what works in other cities. They cite the need to rebuild the platform edge cantilever – which they say is too weak for platform doors. (1) if the platform edges are too weak for doors, they’re probably too weak for passenger crowds, and need to be fixed anyway (2) with platform doors, there’s no need to maintain a refuge space under the platform, so they can strengthen the platform edges with props.
Steve: I await the TTC report on PEDs to see how reasonable or not their current proposal might be. As for retrofits on the T1s, it’s not a question of space but of the technical problems integrating ATC with a rudimentary power and braking system on the old trains. Then there’s the issue of whether the trains would last another 10-15 years with rebuilds.
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As for CBTC, the Alstom control system is not made in Canada, but the Seltrac system, now owned by Hitachi, is designed and developed in TORONTO! It is used in about 50 systems around the world including London DLR and SSL, Vancouver Skytrain (all lines).
Steve: Designed and developed in Toronto, maybe today, but, where do the parts come from. It was originally developed in Germany for the Krauss-Maffei maglev train system, and has passed through various hands, most recently Hitachi. To what extent the Toronto office is a marketing outlet, as opposed to actual technical development and manufacturing, is a valid question.
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Well the TTC never did (nor has this argument ever been tossed around when previous TTC cars reached the end of life, to justify keeping them longer), so why should this time be any different?
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As an alumni of the Thales now Hitachi office, I can assure you that the system design and all the software for the signalling system is done in Toronto by Canadians. The bulk of signalling is now software and not in the hardware and it was really cool to work for them and travel and export Canadian software to metros around the world.
Steve: Thank you for the clarification.
A simpler way of doing ATC with the T1’s (for a temporary period to get the project going rather than wait for new trains) is to just do Automatic Train Protection (ATP) on the T1s where the computer just supervises the train driver and does not drive the train automatically. The difficulty is integrating with the T1’s old software to control the motor and brakes, but it is relatively easy to integrate into the hardware based emergency brake system and add sensors for train speed detection and position. The question is how long will the current signalling system on Line 2 last vs how long will it take to get the new trains, a cost-benefit analysis would be needed.
Montreal does not have CBTC on their trains, it is a track circuit based ATC, 1960’s technology. Montreal trains also never go outside, their system and yards are all covered.
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Thanks Steve, and commenters. I’m glad for the depths of context and info that are offered by most everyone. As for finding big dollars, again, there are a slew of costs to us from cars that are mixed up in all budgets and at all levels, including climate/future, so more user pay for cars should be given to the transit systems/operations, though of course at times, the wrong things can be done by/for transit in the wrong places, and sharper/smarter choices would be overdue, including surface routes, including roads, eg. DVP. Just to be ‘roadical’, and if anyone does want to squeeze those billions….
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