Item - 2026.TTC12.1

The TTC Board:

1. Approved the recommended 2026 Operating Budget totalling $3.028 billion in gross expenditures, $1.547 billion in revenues and a net funding requirement of $1.481 billion for the TTC comprising the following services, as summarized in Appendix A of this report:

a. 2026 TTC Conventional Operating Service Budget of $2.826 billion in gross expenditures, $1.537 billion in revenues and a net funding requirement of $1.289 billion; and,

b. 2026 Wheel-Trans Operating Budget of $201.6 million in gross expenditures, $10.3 million in revenues and a net funding requirement of $191.4 million.

2. Approved a 2026 year-end Operating workforce complement of 15,299 positions.

3. Approved the implementation of monthly fare capping through PRESTO, effective September 1, 2026, whereby customers who pay per trip will not be charged for additional trips after completing 47 paid rides within a calendar month, consistent with the equivalent value of a Monthly Pass.

4. Approved the related fare policy and product changes outlined in Appendix E of this report that are required to support monthly fare capping, including:

a. Aligning pass products with the new capped structure; and

b. Phasing out or restructuring any products that duplicate benefits of the cap.

5. Directed the Chief Executive Officer to undertake all activities necessary to implement monthly fare capping in collaboration with Metrolinx, including system configuration, customer-facing materials, operational readiness, and communications.

6. Directed staff to report back to the TTC Board following the first year of monthly fare capping with an assessment of impacts on ridership, revenue, equity outcomes, customer experience, and any recommended fare policy adjustments.

7. Reaffirmed requests to the Federal and Provincial Governments for a tri-partite development of a sustainable, long-term funding model for public transit capital and operation's needs.

8. Delegated authority to the Chief Executive Officer to execute any transfer payment and/or contribution agreements required with the Province of Ontario and/or the Government of Canada to receive intergovernmental funding for priority projects and programs, subject to terms and conditions satisfactory to the TTC’s General Counsel.

9. Forwarded this report to the City Budget Committee and the City Manager as the official 2026 Operating Budget submission for the Toronto Transit Commission.

10. 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.

11. The TTC Board directed 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.

John Montagnese, Interim Chief Financial Officer, Mark Del Vecchio, Head, Financial Planning and Analysis, and Erik Franc, Manager, Performance Reporting, delivered a presentation on this item.

The recommended 2026 Operating Budget outlines the funding required to deliver Toronto Transit Commission (TTC) Conventional and Wheel-Trans services. The budget reflects current service needs, ridership trends, financial performance, economic conditions, and available funding. It also aligns with the Board’s priorities and the TTC 2024–2028 Corporate Plan.

The recommended 2026 Operating Budget is $3.028 billion, supported by $1.547 billion in revenues, resulting in a net City funding requirement of $1.481 billion, as illustrated in Table 1.

Table 1 Recommended 2026 Operating Budget

A key focus of the 2026 Operating Budget is maintaining and enhancing affordability for customers while preserving and building on recent service enhancements. Building on the TTC’s commitment to fare stability, the budget freezes fares for the third consecutive year and introduces fare capping effective September 1, 2026. Fare capping will limit a customer’s monthly fares, providing frequent riders with predictable and lower transit expenses. This initiative marks the start of a multi-year approach to improving affordability and access to transit.

To maintain affordability, reliability and accessibility, the 2026 Operating Budget:

• Freezes fares for the third consecutive year, ensuring affordability for TTC riders.
• Introduces fare capping, eliminating upfront costs and reducing costs for customers by limiting monthly fares after 47 trips.
• Increases service hours by 2.0%, for a total of 9.9 million hours, to address congestion, adapt to changing travel patterns, deliver world-class service during the FIFA World Cup, and achieve 426.4 million rides in 2026.
• Sustains prior year service enhancements, including peak capacity increases on Lines 1 and 2, safety and security measures, and extending cleanliness and reliability pilots.
• Supports the first full year of operations for Line 5 Eglinton and Line 6 Finch West, with costs fully offset by Provincial funding under the Ontario–Toronto New Deal Agreement.
• Expands Wheel-Trans service to deliver an estimated 4.4 million rides, reflecting an 8.7% increase in demand over the 2025 Budget.
• Delivers $87.3 million in cost savings through expenditure reviews and efficiency measures that do not impact customers, supplemented by a $35.0 million draw from the TTC Stabilization Reserve Fund.

These measures allow the TTC to enhance affordability for riders, sustain service levels, manage inflationary pressures and slower-than-expected ridership growth in 2025 and ongoing operating challenges.

TTC Conventional Service represents $2.826 billion or approximately 93% of gross expenditures, while Wheel-Trans represents the remaining 7% of gross expenditures or $201.6 million. About 42% of the Operating Budget is funded through TTC own source revenues, including approximately 39% from passenger fare and ancillary revenues and 3% from TTC Stabilization Reserve and TTC Long-Term Liability Reserve funding. Provincial Funding contributions make up approximately 9% of the budget, reflecting the third year of the Ontario-Toronto New Deal Agreement. The remaining 49% is supported by the City’s property tax base. Chart 1 illustrates how the 2026 Operating Budget is allocated to fund TTC Conventional Service and Wheel–Trans Service.