The TTC released its 2025 budget package on January 7 including the proposed Operating Budget, the Capital Budget and Plan, and the Real Estate Investment Plan. The TTC Board will discuss this package at its meeting on January 10.

• Recommended 2025 TTC Operating Budget; 2025-2034 Capital Budget and Plan and 15-Year Capital Investment Plan and Real Estate Investment Plan Update

This article is a preliminary review of the Operating Budget. I will turn to other parts of the package in separate articles, and will add follow-up articles after the Board meeting.

Highlights:

• Fares continue to be frozen at 2023 levels.
• The total Operating Budget for 2025 is $2.819 billion of which $1.387 billion will be covered by City subsidies. This is broken down as:
  • Conventional system: $2.636 billion with a subsidy of $1.214 billion
  • Wheel-Trans: $182.6 million with a subsidy of $173.2 million
• Service hours will be increased by 5.8%. There are some specifics in the budget, but more details are to follow.
  • 1.7% increase to account for ridership growth and new services for accessibility pending completion of the Easier Access program.
  • 2.2% increase for off-peak service.
  • 1.9% increase for opening Lines 5 and 6 together with bus network changes (tentatively planned for July and August, respectively, subject to Metrolinx confirmation of dates).
• Specific service improvements listed in the budget include:
  • Implementation of 6 minute service or better from 7am-7pm, 7 days/week on 505 Dundas, 511 Bathurst and 512 St. Clair.
  • Return to pre-pandemic wait times on subway lines during off-peak periods.
  • Restoration of pre-2023 off-peak crowding standards. Service will be increased starting in April on nine priority routes (not listed).
• Increase in Wheel-Trans service to handle an expected 4 million more rides in 2025.
• Increase in capacity to recruit, train and develop the workforce.
• A pilot program on 10 key routes to reduce bunching and gapping.
• A pilot program to improve cleanliness in six key subway stations (Scarborough Town Centre, Kennedy, Dundas, Finch, Spadina, Lansdowne).
• Improved maintenance and asset management for key items such as subway work cars.
• Beginning an environmental resiliency program.
• Expanding the fare compliance program to increase revenue.
• Cost savings of $37.2 million from budget reviews and efficiencies.

These items are discussed in more detail in the main part of the article. Many parts of the budget are presented here only in summary with tables showing financial breakdowns. Readers interested in further details should consult the TTC’s budget report linked above.

Budget Overview

The total operating budget, including Wheel-Trans, now sits at $2.8 billion. Of this, fares cover only about 40% of the “conventional” system, a big drop from the days when farebox recovery was at 60% or better. This is due to the combined effect of ridership that is still not at pre-pandemic levels, fare freezes, and the rising cost of operation.

In the short term, there is Provincial funding contributing 7% of the total. However, the “New Deal” expires on March 31, 2027 and this creates a future gap that must be filled over and above the annual growth in subsidy needs.

(Note that $93 million in Provincial gas tax revenue flows through the City to the TTC and is included in the “City Funding” shown here. The remainder of the Provincial gas tax and all of the Federal tax flows to the Capital Budget.)

This budget is a 6.5% increase over 2024 ($85.1 million) arising from various changes:

• The lion’s share of the “Base Pressure” comes from cost-of-living increases in wages ($83.2M), and reversal of a 2024 budgeted reserve draw ($25M)
• There is a one-time adjustment in Workplace Safety and Insurance Board / Long Term Disability costs ($21.3M) changing from accrual to current year accounting.
• The full year cost of 2024 service changes plus planned additions in 2025 ($40.6M, of which $14.2M is for Wheel-Trans).
• “Affordability measures” include a reserve draw ($15M). Note that the reserve may or may not actually be needed depending on actual results for 2025. In 2024, the TTC only spent 96% of its approved Operating Budget.
• Additional revenue ($70.2M) offsets some cost increases. This includes an anticipated $12M from improved fare enforcement.
• The operation of Lines 5 and 6 is covered by a Provincial subsidy and there is no net cost in the TTC’s budget.

The chart below shows the components of the 2025 Operating Budget as they relate to Board and Council priorities.

Metrics

The budget includes a table consolidating several performance metrics and showing their evolution from 2019 (pre-pandemic) to present. At this point there is no discussion of new/revised metrics, notably for service reliability and crowding over the length of routes. Although the On Time Performance target for all modes is 90%, it is a real stretch to think this will actually be achieved for bus or streetcar operations.

The revenue/cost ratio, historically above 60%, dropped with the pandemic onset in 2020 and has not yet grown back to its formal level in part because ridership is still below 2019, and in part because of below-inflation fare increases over the past five years. This is a deliberate policy choice by the City, and the only question is whether a future budget will bring any fare increase or targeted changes in fare structure. The budget contains no discussion of fare policy.

Note that the cost/hour for operations is very substantially higher than an operator’s wage. This number includes many costs that accrue due to vehicle use (mileage), fleet size (servicing and garaging) and infrastructure (stations, tunnels and other fixed subway systems). An ironic effect of one person train operation is that the cost/hour goes up because the non-wage costs are allocated against fewer operator hours. The marginal cost of adding service is considerably lower than the fully allocated cost.

Ridership

The demand for service is expected to remain below 2019 levels overall in 2025 with the range of prjected boardings shown in the chart below. Note that this would bring the system almost to 90% of the 2019 level. However, demand recovery is uneven across the system with many routes now seeing off-peak demand, notably on weekends, above 2019. This is the reason for concentrating improvements in those periods. Off-peak service has a lower marginal cost because no new vehicles are required, and there is generally less deadhead mileage to/from garages relative to in-service hours.

Wheel-Trans demand has been growing at a strong rate, and this is projected to continue in 2025.

The character of TTC ridership has changed since 2019, and is now thought to have settled into a “new normal” pattern for weekday commute trips. Growth in future years will come from economic activity and population. In effect, this pushes the last phase of “recovery to 2019” into the territory where new riders must be attracted to the system rather than simply assuming they will return as their work arrangements evolve from work-from-home to in-person. A related challenge will be whether the population growth and associated travel demand will lie along the traditional pattern served by the TTC network, or will be stronger for non-core journeys where transit is less competitive.

Weekend travel relative to 2019 is stronger and service improvements will be concentrated there. However, this represents a lower proportion of TTC ridership than weekdays, hence less growth in absolute terms.

There is a potential issue in ridership projections for fall 2025 in that an expected bump in demand in November 2024 was not as strong as expected, and 2025 could underperform expectations.

With the opening of Lines 5 and 6, there will be substantial added costs, but comparatively small added revenue. This implies that most riders in the early years will be existing users of the bus service.

“Affordability Measures”

“Affordability Measures” include a number of factors, but the largest among them is a one-time change in the accounting for WSIB/LTD costs by removing an accrual of future year expenses from the current year accounts. This change reflects that post-retirement medical and dental costs are already handled on a current year basis, and the provision for future WSIB/LTD costs is removed from the budget. This is an accounting change, and does not represent any new initiative or efficiency within the TTC.

The Car Parking Strategy involves a reduction in lease payments to Hydro One for underutilized parking lots on their property that will be downsized.

New & Enhanced Functions

The TTC lists several areas for new and enhanced functions and operations, although the dollar value of the changes is small. These changes are largely financed in part through revenue from the fare compliance program, partly offset by its increased cost.

This shows how the claimed losses from fare evasion cannot be completely recaptured because enforcement has a cost. 56 new Fare Inspectors and 10 Special Constables will be deployed on the bus network, plus 3 staff to monitor and manage this program. (Note that values shown here are for implementation part way through 2025. Full year numbers in 2026 will be higher.)

Other key changes include:

• “$1.0 million and 12 positions to enhance workcar and electrical preventative maintenance, in response to increased workcar usage for capital work to meet maintenance standards required to improve service reliability.” This is a direct response to the ongoing problems with the ability to complete planned maintenance work such as track repairs.
• 7 Supervisory staff will be redeployed to reduce bunching and gapping on “10 of the most problematic routes”.
• Service will be improved substantially on three streetcar routes (Dundas, Bathurst and St. Clair) where cars will run every 6 minutes or better, 7am-7pm, every day. Typical headways now are every 10 minutes. Combined with a focus on headway management, this should reduce crowding and loading delays, and speed up service.
• Off-peak subway service will be restored to pre-pandemic levels.
• Off-peak crowding standards will be restored to pre-2023 levels.
• Additional workforce to improve station cleanliness.
• 10 street outreach workers for downtown streetcar routes (Spadina, Queen, Kingston Road, Carlton) initially focused on overnight services. (This will be funded by Toronto Shelter and Support Services.)

Look-Ahead to 2026-27

Costs in future years will continue to rise faster than revenues and added funding will be needed.

In 2026, the full year cost of changes to be implemented through 2025 will appear.

The numbers for 2027 should be read with care because they do not include provision for future contract negotiations or various service enhancements shown in the Five Year Service Plan. Moreover, funding under the Provincial “New Deal” expires on March 31, 2027.