Presto fee hike could hit Transpo budget

The provincial agency that runs Presto has suggested OC Transpo shell out five times more in commissions for each smart card tap, Postmedia has learned.

A 10-per-cent cut from each fare Transpo collects when riders use their Presto cards would cause the city’s transit costs to skyrocket, leaving council to decide whether to hike fares or put the burden on the shoulders of taxpayers. It hasn’t come to that yet. Transpo and Metrolinx continue to negotiate on a contract extension for Presto. The current 10year agreement expires in October.

Behind the scenes, Transpo has been budgeting for a four-per-cent commission paid to Metrolinx to manage the Presto transactions. A major shakeup of Transpo’s fare table will be revealed in June and the fares are expected to take into account the additional money Transpo would be paying to Metrolinx.

If the transit commission approves the new fare table and is forced to pay Metrolinx a commission above four per cent, Transpo would need to determine where the revenue could be made up, either through fares or the transit levy on property tax bills. Only council can make decisions on changes to taxes.

The city won’t say how much Metrolinx wants from Transpo.

Metrolinx has been mum on its request.

“Because the details of the new agreement are currently under negotiation and not finalized, we can’t speculate on what the new commission will look like,” Metrolinx spokesperson Alex Burke said Tuesday.

But sources at the city say Metrolinx is looking for a huge increase in the commission.

Both sides are in a difficult position.

Transpo can’t afford a multimillion-dollar increase to its budget for Presto without asking for more money from fare-paying customers or taxpayers. On the other side, Metrolinx is getting pressure from the provincial government to cover the costs being spent on the Presto system.

The city currently pays a twoper-cent commission for — as Cumberland Coun. Stephen Blais, head of the transit commission, told reporters this week — “the privilege of being forced to use the Presto pass.”

Blais also noted that “the province is currently considering a multimillion-dollar tax increase on the Presto card,” but he wouldn’t say how much more Metrolinx is asking from Transpo because the talks are ongoing.

Metrolinx collected $1.3 million in Presto commissions from Transpo in 2015. The provincial agency doesn’t know how much money it spent on Presto operations for Transpo because it doesn’t break down costs by municipality.

The city needs to use Presto, not only because it has been established as Transpo’s electronic fare system, but also because the province requires the municipality to use the smart card if it wants millions of dollars in annual gas tax transfers.

Transpo owns the Presto hardware on buses and Trillium Line platforms, but it needs Metrolinx to run the back-end network that processes the transactions. Transpo has been counting on Presto to be the electronic fare card for the Confederation Line LRT.

Metrolinx is also negotiating contract extensions with seven Presto-using municipalities surrounding Toronto.