Financial and Major Projects Update for the Period Ended September 27, 2025

For the period ended September 27, 2025, the TTC reported a net year-to-date favourable operating variance of $5.8 million (0.5%), consisting of an unfavourable revenue variance of $57.5 million (6.3%), which was fully offset by $63.3 million (3.1%) in under-expenditures. The unfavourable revenue variance was driven by lower TTC Conventional passenger revenues due to lower-than-anticipated ridership growth, lower Provincial Funding due to the delayed timing of expenditures for Line 5 and Line 6 that are eligible for reimbursement under the New Deal Funding Agreement ("New Deal"), and lower ancillary revenue due to the timing of recoveries from third parties. The favourable expenditure variance was driven by delayed timing of planned expenditures to support the opening of Line 5 and Line 6, diesel cost savings due to the elimination of the Federal Carbon Tax effective April 1, 2025, delays in implementation of planned Information Technology (IT) software rollouts, 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 $2.857 billion gross and $1.387 billion net, is projected to be $15.5 million net unfavourable to budget (1.1%), driven by an unfavourable revenue variance of $130.4 million (8.9%), partially offset by an under-expenditure of $114.9 million (4.0%). The unfavourable full-year revenue variance of $130.4 million reflects the continued trend of lower-than-budgeted passenger revenue for the remainder of the year, a reduction in Provincial Funding due to delayed timing of expenditures to support the opening of Line 5 and Line 6, which are eligible for reimbursement under the New Deal, and delayed third-party recoveries. The favourable full-year expenditure variance of $114.9 million reflects delayed expenditures to support the opening of Line 5 and Line 6, diesel costs savings due to the elimination of the Federal Carbon Tax effective April 1, 2025 and the permanent reduction in the Provincial Fuel Tax effective July 1, 2025, labour cost savings due to workforce vacancies, and delays in implementation of IT software rollouts and lower materials and services costs, partially offset by higher Wheel-Trans operating costs due to higher-than-budgeted passenger ridership. To address the projected $15.5 million net unfavourable variance, TTC senior management introduced a non-union hiring pause at the end of September and will review discretionary spending to identify additional opportunities for cost savings by year-end. For the period ended September 27, 2025, the TTC's capital expenditures totalled $930.8 million, representing a spending rate of 93% when compared to the year-to-date planned (calendarized) budget of $1,002.4 million. Of the total capital expenditures incurred to date, $923.7 million, or 96% of the base capital program's planned budget of $965.4 million, was spent, and $7.1 million, or 19% of the $37.0 million planned budget for transit-expansion-related projects, was spent. When comparing year-to-date spending to the total approved 2025 Capital Budget, 54% was spent to the end of Period 9 for the TTC base capital program and 29% for transit-expansion-related projects, resulting in an overall spending rate of 54% for the nine-month period. By year-end, the TTC's capital spending is projected to be in the order of $1.535 billion, representing an overall 88% spending rate, with the TTC's base capital program projected to expend $1.514 billion or 88% and transit-expansion-related capital expenditures projected to reach $21.0 million or 86%. 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.

3. Authorize the recommended budget adjustments noted in Recommendations 1 and 2 above, and in the TTC's 2025-2034 Capital Budget and Plan, be included in the TTC's Capital Variance Report submission for the nine months ended September 30, 2025, for City Council consideration and approval. 4. Approve the 2025 Operating Budget in-year budget adjustments of $12.2 million gross revenue and $12.2 million 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. 5. Authorize that the information contained in Confidential Attachment 1 remain confidential as it contains information about a position, plan, procedure, criteria or instruction to be applied to negotiations carried on or to be carried on by or on behalf of the City or local board and information explicitly supplied in confidence to the City or local board by Canada, a province or territory or a Crown agency of any of them.