The TTC Board considered its Operating and Capital budgets on January 7 before passing them on to the City as part of the overall budget process. For details on these reports see:

• TTC 2026 Operating Budget
• TTC 2026 Capital Budget and 2026-2040 Plan

Over roughly three hours there was a staff presentation, public deputations and a debate that often avoided major discussion of alternatives and future policy. A key item for future budgets is the shortfall in funding from provincial and federal governments, but also the city’s appetite for continued increases in the municipal subsidy.

Some commentary and claims about the TTC budget have distorted or missed some key items.

• Yes, the TTC is asking for more subsidy in 2026, but at a level set by the Mayor’s Office before the budget was completed. We have known for some time that this number was $91-million, and the budget options were chosen to hit this target.
• There is a confusion between actual cuts within the budget and “efficiencies”. The latter implies that there is always waste to be found that can keep subsidy calls down, but in fact barely $10-million falls under that heading for 2026, and there is even less available going forward into 2027.
• The big reductions lie in accounting changes shifting depreciation costs to the Capital budget, and booking WSIB costs only for the current year rather than accruing future year costs arising from current incidents. There is also an unspecified corporate wide reduction with no indication of what the impact will be. These cannot be repeated in 2027.
• The budget-to-budget comparison from 2025 to 2026 looks not too bad because 2025 budget was at a higher level than actual results. The gains needed in 2026 are considerably higher measured against the 2025 actuals which are below the budgeted levels.
• Discussion of how to eliminate the operating shortfall through the farebox led to the frightening figure of a $1.90 fare increase. This of course would have a huge effect on affordability and ridership especially if programs to improve service were choked off at the same time. That big number is a direct result of years of fare freezes going back into the Tory era and the fact that ridership is still well below 2019 levels. The gap gets wider and wider, and would be paid for by bigger and bigger fare hikes if that approach were taken.
• Appeals for better operating funding will inevitably run into claims that other cities have raised fares while Toronto chose to keep its fares low. That is a policy decision by the City. Should additional subsidy be paid to support that from other governments? One problem with numbers cited by management is a mix-and-match of cash fares and regular adult fares in some cities that they cite by comparison to Toronto. For example, the MiWay (Mississauga) cash fare is $4.50, but the adult Presto fare is $3.50, only slightly higher than Toronto’s.
• Fare enforcement has improved revenue by more than expected, but is hampered by available staffing and operating practices such as all-door loading that would cost money and capacity if they were changed. The Board seems incapable of looking at both sides of the ledger and fixates on revenue, enforcement and limiting opportunities for evasion without considering the effect on service delivery.
• Claims about service improvements in 2026 muddle what is actually in the budget. The subway service improvements were actually implemented in 2025. All the budget does is make provision for full-year funding of this change (and similarly for other 2025 changes). Subway service is constrained by the size of the Line 1 and 2 fleets, plus the limitations of the signal system on Line 2. Current replacement plans do not add to the fleets, and there is considerable expense to keep Line 2 trains running until the new trains arrive. There is some provision for extra bus and streetcar service, but some of that will disappear to congestion effects, and service improvements will not begin until Fall 2026.
• Commissioner Saxe proposed that the TTC study the elimination of cash fares. Nothing will come back on this for two budget cycles (i.e. at least 2028) because the report is not due until early 2027 and will likely have no effect on that year’s budget.
• Chair Myers proposed that the 2027 budget and subsidy consider linking goals and metrics for TTC performance. This is a dangerous idea on a few counts. Most obviously, what targets would the TTC aim at? It is no secret that existing metrics leave a lot to be desired and, in some cases, have been cooked to put management in the best light. The last thing we need is a potential cut in funding to arise from failure to meet targets, or to be based on metrics that do not reflect actual rider experience. In turn, that would encourage creative reporting of results when what is needed is transparency and honesty.

Balancing the Budget

TTC subsidy request in 2026 is for $91-million more, but this target was set by the Mayor’s Office some time ago. This is unlike some departments/agencies that ask for more than their allocated increase as part of their budget submission. TTC hit the mark that was asked, with $3-million more to fund the fare capping proposal in the last four months of 2026.

Major reductions shown below include:

• Shifting depreciation to the Capital budget.
• Changing accounting for WSIB (Workplace Safety and Insurance Board, formerly known as Workers’ Compensation) costs so that only current year spending is booked to current year. Previously, future year costs arising from current year events were booked as accruals.
• Corporate-wide cost reductions (unspecified).

Accounting changes are not cost reductions, and they can only be achieved once. The chart and following table show clearly that “efficiencies” only account for $10-million in 2026, and only $4-million is anticipated in 2027.

Finally there is a $35-million draw from the TTC’s Stabilization Reserve.

The term “efficiency” is often muddled with other types of savings giving the impression that there is considerable margin for belt-tightening at the TTC. This plays into the agendas of those who claim that the TTC could find internal savings rather than looking for a larger handout. There are definitely issues at the TTC to be addressed notably provision of more reliable service with the resources already on the street. However, any impression that subsidies are excessive sets up a debate that will simply end in more cutbacks, and likely without any public discussion of how these are achieved until the damage is done.

One source of confusion in the chart is the term “sustainable reduction”. These are changes that will not be reversed in 2027 and later years, unlike a reserve draw. However, they are “one time” in the sense that future gaps in the budget cannot be filled by doing these again. New revenue and/or savings will be required to offset the new budget pressures in future years.

Balancing the Budget With Fares

Three issues came up in a discussion of fares:

• If the budgetary shortfall were to be made up from the farebox, how much would fares have to rise?
• What is the TTC’s fare history compared to other systems?
• What benefits have come from fare enforcement, and are there more ways to ensure that TTC gets the revenue it should?

Covering the Shortfall

According to management, covering the projected 2027 shortfall from the farebox would require a bump of $1.90 in the adult fare taking it from $3.35 to $5.25 (other fares proportionately). That is a 56.7% increase.

With the projected 2025 fare revenue of $1,044.9-million, that would translate to just under $600-million before the effects of elasticity (lost riding due to higher fares) kicks in. With that big a jump, the effect on ridership would be considerable, and it would take TTC fares well above the level of surrounding municipalities.

TTC fares were frozen in 2018, 2020, 2021, 2022, 2024 and 2025. Each freeze represents roughly $30-million in foregone revenue, and the effect is cumulative so that by 2025 this represents close to $200-million annually. Whether this was good policy is a matter for debate, and certainly during the pandemic years, policy decisions faced a very different landscape.

The point is that these freezes under both Mayors Tory and Chow permanently shifted the TTC away from its historical position with a high farebox recovery rate. In turn, this means that any new costs loaded onto fares represent a larger proportional increase than in the past. Any move to reverse course would have a huge effect that runs contrary to the City’s policy of encouraging transit use. If we want people to use transit, then we have to pay for and provide it.

Management reported that without the fare freezes and only inflationary increases, fares would now be in the range $3.60-3.65.

Elsewhere in the GTA

Comparison with other GTA systems is tricky because there are different concession schemes, and the discount for paying by Presto is larger in some places than others. In particular, comparison with cash fares can be misleading because some systems set them deliberately high to discourage cash payments.

All the same, if Toronto seeks added subsidy dollars, does a fare freeze invite criticism that Toronto is asking other parts of Ontario to subsidize cheaper transit fares? The trade off, of course, is that getting more people on transit has an economic benefit, but that is hard to track to specific extra costs the province would face if TTC carried fewer riders.

Fare Enforcement

Although it is not in the reports, TTC management cited an increase of $12.5-million in revenue in 2025 through fare enforcement and physical changes to stations discouraging evasion. This compares to an expected $10-million. The problem lies in the deployment of Fare Inspectors (aka Provincial Offences Officers). When they are working on streetcars, fare evasion goes down. When they shift to buses, fare evasion goes down there, but streetcars go back up. It’s a whack-a-mole problem.

There was no discussion of the cost of fare enforcement versus the revenue gained, nor of how many more staff would be required to maintain better results across the system.

Commissioner Saxe proposed that the TTC study the elimination of cash fares (see “Motions” at the end of the article). Whether this would bring more revenue by eliminating underpayment is hard to say. As long as there are ways to avoid paying a fare at all, people will use them.

TTC management proposes to eliminate all-door boarding on buses outside of peak periods. This can be counterproductive by increasing dwell times and reducing capacity utilization because of crowding at the front of vehicles. No figures were provided setting off the expected revenue gain against the cost of less productive service.

Budget vs Actual Comparisons

A problem that bedevils budget debates is that different numbers are used in various contexts. For example, the typical budget is presented in comparison to the previous year. When past results are close to budget, this works possibly with a footnote for small scale adjustments. However, when the previous year probable actuals are considerably different from the budget, a budget-to-budget comparison might not reveal the true scope of some issues.

For example, TTC revenues are projected to be $1,340.2-million in 2025 against $1,470.6 in the budget. The 2026 budget anticipates $1,546.9-million. The budget-to-budget increase is 5.2%, but the budget-to-actual increase is 15.4%. This will require substantially better financial performance in 2026 than the budget indicates, and creates a risk that the TTC might not hit its budget targets.

“Investing” In Transit

The total of $344-million over four years shown below looks impressive, but most of this comes in 2026 and is due to provincial “new deal” funding. The City is negotiating a “New Deal 2.0” with Ontario, but there are no details of what this will entail, or what gap there will be in the 2027 budget.

The cost of fare freezes (discussed above) is not included in this running total. The cumulative value of the 2024-26 freezes is about $90-100-million in the 2026 budget, much more than any of the other line items except for the opening of Lines 5 and 6.

The service budget is stated in vehicle or train hours because the primary cost driver is the crew. There are substantial other costs for vehicle and infrastructure maintenance, supervision and administration, but hours are used as the basis for budgeting.

Although the opening of lines 5 and 6 will free up bus operating hours, these will be kept in reserve until Fall 2026 as a contingency. The frequent replacements of Line 6 trains with buses is a major issue that is still not solved. Come the Fall, the assumption is that the by-then spare hours will go into service improvements, as yet unspecified, through a new Ridership Growth Strategy.

Some additional hours go to extra night car service because a project to expand streetcar storage capacity will not complete for a few years thanks to poor planning and some unforeseen site issues.

eBus operation requires more vehicles than hybrid buses because of range limitations. Articulated buses are being retired due to age, and there are not yet eBus equivalent to replace them. This requires more hours to operate standard-sized vehicles in their place.

The restoration of Lines 1 and 2 peak period service was already in place at the end of 2025. The extra money in 2026 funds full year operation, not an additional service improvement. Further increases in subway service are limited by the available fleet and, on line 2, the signal system technology. This problem will remain until about 2030 depending on the timing of new and additional train deliveries as well as signal upgrades on Line 2.

Some of the additional hours will go to address congestion. Providing the same service with slower vehicles increases the hours needed. The cumulative cost of this over several years was cited by management as $100-million.

The Ridership Growth Strategy is still in preparation and is likely to be unambitious thanks to budget limits. This is a major problem with such strategies at TTC except for the original one over two decades ago. An RGS should present a menu of options of ways the system could be improved to attract riders whether these fit within projected funding or not. The whole idea is to identify how much money beyond current plans would be needed and what this could achieve.

It is ironic that the City has a totally unfunded proposal TransformTO to very substantially increase transit service, but no sense of how this would be done or what the ongoing operating cost implications would be. A build-up to the new service levels cannot occur overnight, and costs related to a 2040 target will have to show up in about 2035. Conversely, if TransformTO is simply a nice, aspirational scheme with no real commitment, then it should not be included in the long-range capital shortfall.

Finally, fare capping has been announced both by the TTC and the Mayor in their press releases as if it will happen tomorrow. Actually, it is planned for September, as is the transition to a 40-fare cap in 2027 which of course is subject to 2027 policies of the Mayor, Council and TTC Board then in place.

State of Good Repair

The State of Good Repair 10-year plan is constrained by available funding, and there is much more to be done even within the early years. For details please refer to my capital budget article.

Note that “Stage of Good Repair” includes replacement vehicles, and on that count most of the cost here is for new subway cars for Line 2, and new eBuses. The move to eBuses includes costs above historic levels including the higher unit cost for vehicles and the cost of providing power supplies at garages and at key points on routes.

The budget documents do not break down the line items into the component categories such as “SOGR” and “Growth”. Most budget lines will have a mixture of projects under them in multiple categories because, for example, one might rehab part of the system and make growth provisions at the same time.

In the original Capital Budget report (in my previous article), “Service Improvement” is broken out from “Growth”, and the $5.5-billion shown for these items below is made up of $4.3-billion for service improvement and $1.2-billion for growth.

Miscellany

The question of double blade streetcar switches came up as the existing single blade versions have been repeatedly cited as an impediment to faster streetcar service. I will leave that technical debate for another day and not only that there is more involved with track condition and the operating constraints on streetcars than the switch design. In any event, an engineering study of the matter is underway by TTC.

Amusingly, it turned out that the TTC was not successful in an application to the now-notorious Provincial Skills Development Fund to get money for an apprenticeship program. Management advise that there is a round 2 of funding, and the TTC is trying again.

Proposal

Although he did not place a motion on the subject, Chair Myers floated the issue of stop removal as a way to speed service. I will not burden readers again with my thoughts on this beyond saying that stop spacing is a management excuse to avoid work on service reliability and transit priority. Also, such a change would have a major effect on accessibility depending on the change in the Service Standard that prevents the elimination of some stops today.

One might think that the TTC’s approach to operating transit vehicles is to limit how many people they actually have to serve.

Motions

Motion to Amend Item (Additional) moved by Councillor Dianne Saxe (Carried)

Given that:

• The TTC budget is under immense and growing pressure,
• It costs the TTC about $20 million/ year to accept cash fares ($10 million in operating costs and $10 million in lost revenue from fare cheating (partial payment)),
• Many transit systems in Ontario and around the world no longer accept cash fares, and
• Since 2023, Open Payment has meant that multiple payment alternatives are available to ensure equity and accessibility for TTC customers who don’t have easy access to a PRESTO outlet, including prepaid credit cards that are widely available without credit checks or bank accounts,

The TTC should consult the public on their preferred option for spending this $20 million/year, including options such as:

• continuing to accept cash fares
• expanding Fair Pass, or
• improving wayfinding,

and report back to the TTC Board as part of the Q1 2027 Fare Modernization Update with recommendations on whether, when and how to fairly phase out cash fares.

Motion to Amend Item (Additional) moved by Councillor Jamaal Myers (Carried)

The TTC Board directs that the CEO work with the City Manager to explore and report back to the Strategic Planning Committee as part of the 2027 budget process and in advance of the 2027 budget with opportunities to strengthen the accountable and transparent relationship between the TTC and the City of Toronto, including consideration of mechanisms to formalize agreements between both entities on key performance indicators, verification/auditing, service levels, safety and customer experience.