Item - 2025.TTC8.6

The TTC Board:

1. Approved the 2025 Capital Budget in-year budget adjustments to offset projects that have had accelerated spending by $36.1 million with projects that have experienced delays and lower spending by $36.1 million, with no debt impact, as outlined in Appendix 4 of this report.

2. Authorized the recommended budget adjustments noted in Recommendation 1 above, and in the TTC’s 2025-2034 Capital Budget and Plan, be included in the TTC’s Capital Variance Report submission for the six months ended June 30, 2025, for City Council consideration and approval.

3. Approved the 2025 Operating Budget in-year budget adjustments of $26.5 million gross revenue and $26.5 gross expense ($0 net) in accordance with the implementation of PS 3400 – Revenue Standard, to reflect costs that are recoverable through the billing of a third party, to be budgeted and recognized at the gross revenue and gross expense level.

This report sets out the operating and capital financial results for TTC Conventional and Wheel-Trans services, and provides a status update of the TTC’s major capital projects for the period ended June 28, 2025. Financial projections to year-end 2025 are also provided. This is the second of four quarterly financial updates provided annually to the TTC Board for the fiscal year and subsequently submitted to the City of Toronto for consolidation with their financial variance reporting to City Council.

For the period ended June 28, 2025, operating results indicated a net year-to-date unfavourable variance of $17.7 million, consisting of an unfavourable revenue variance of $43.7 million that was partially offset by under-expenditure of $25.9 million. The unfavourable revenue variance was primarily driven by lower TTC Conventional passenger revenues due to lower-than-budgeted ridership levels, which is largely attributable to softer economic growth thus far in 2025 and higher-than-normal inclement weather in Q1 2025, lower Provincial Funding due to the timing of expenditures for Line 5 and Line 6 that are eligible for reimbursement under the New Deal Funding Agreement (“New Deal”), and unfavourable ancillary revenue due to timing of third-party recoveries. The under-expenditures were mainly due to delayed timing of planned expenditures to support the planned opening of Line 5 and Line 6, delayed IT software implementation, delayed procurement for materials and services, and lower labour costs due to workforce vacancies.

For the full year, the TTC’s 2025 Operating Budget of $2.845 billion gross and $1.387 billion net, is projected to be overspent by $36.5 million net, including an unfavourable revenue variance of $80.5 million and a favourable expenditure variance of $44.0 million.

The unfavourable full year revenue variance of $80.5 million is primarily due to the trend of lower-than-budgeted passenger revenue forecasted to continue for the remainder of the year and lower Provincial Funding due to delayed timing of expenditures for Line 5 and Line 6 that are eligible for reimbursement under the New Deal. These are partially offset by higher-than-expected Wheel-Trans passenger revenue due to higher ridership demand.

The favourable full year expenditure variance of $44.0 million is primarily due to delayed timing of expenditures to support the opening of Line 5 and Line 6, diesel cost savings resulting from the removal of the Federal Carbon Tax effective April 1, 2025, lower labour costs due to workforce vacancies, and delayed timing of planned expenditures for IT software implementation, materials, and services. These are partially offset by higher Wheel-Trans operating costs due to higher-than-budgeted passenger ridership. TTC senior management will undertake strategies over the remainder of the year to help mitigate the $36.5 million net expenditures overspend, as required.

For the period ended June 28, 2025, the TTC’s capital expenditures totalled $604.3 million, representing a spending rate of 107% when compared to the year-to-date planned (calendarized) budget of $565.1 million. Of the total capital expenditures incurred to date, $600.9 million, or 107% of the base capital program’s planned budget of $561.6 million was spent, and $3.4 million, or 97% of the $3.5 million planned budget for transit-expansion-related projects was spent.

When comparing year-to-date spending to the total approved 2025 Capital Budget, 36% was spent to the end of Period 6 for the TTC base capital program and 5% for transit-expansion-related projects, resulting in an overall spending rate of 35% for the six-month period.

By year-end, the TTC’s capital spending is projected to be in the order of $1.503 billion, representing an overall 87% spending rate, with the TTC’s base capital program projected to expend $1.482 billion or 90% and transit-expansion-related capital expenditures projected to reach $20.9 million or 28%. The year-to-date results and year-end projections reflect the recommended adjustments to the 2025 Capital Budget and future year cash flows in the 10-Year Capital Plan, as outlined in Appendix 4 of this report. This accounts for projects that have had accelerated spending and projects that have experienced some delays, and therefore, lower spending. These adjustments result from the ongoing monitoring of capital delivery and spending by TTC staff to ensure capital funding is maximized during the year.