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Premier Kathleen Wynne congratulates John Tory on his election win with smiles, a hug and a kiss last week.Kevin Van Paassen/The Globe and Mail

The Ontario government is mulling paying part of the cost of operating the Toronto Transit Commission – a major policy change that would see Queen's Park become more heavily involved in city transit than it has been for two decades.

Just over two weeks ago, John Tory was elected Toronto mayor on an ambitious transit platform and a pledge to work with other levels of government. Even though he won't be sworn in until next month, his transition staff has already met with the Premier's staff, including a sit-down Wednesday, and Kathleen Wynne is expected to meet with him in the coming weeks.

Since then-premier Mike Harris killed operating funding for the TTC, the province has helped the city only with capital dollars – such as building transit lines. That has left the TTC in the unusual position of being a major transit system that depends entirely on fares and the property tax base to pay its operating budget.

Two sources said there have been "positive" signals from Ms. Wynne's office about picking up some of the tab for running the TTC.

Any move on transit funding would be part of a broader effort to make headway on a range of issues between the city and the province, a government source said.

A source close to the mayor-elect characterized discussions with the province as "very positive" since the election.

On Thursday Transportation Minister Steven Del Duca's spokesman contradicted the sources and denied that Ontario is considering restoring the funding.

"Ontario is not considering covering TTC operating costs and the topic has not been part of the discussions between the city and the province," he wrote in an e-mail.

According to insiders who spoke to the Globe, the two sides have not broached the subject of TTC operating funds.

Mr. Tory said Thursday that he has not had any specific discussions about the province contributing towards the TTC's operating costs.

"I will only say that I have not been party to any such discussions, and I am not aware any have happened," he told reporters. And while he said that he and his team have been engaged with the province in a "wide variety of discussions" on transit and other issues facing Toronto, "there have been no specific, granular discussion of that kind that I've taken part in or my staff have yet."

But other sources confided that the topic is under consideration by the province.

TTC CEO Andy Byford said he and his staff met with senior provincial bureaucrats to discuss restoring operational funding about eight weeks ago and left feeling "positively optimistic."

"We weren't sent away with a no," he said. "I would say it was a very positive meeting."

Mr. Byford said it is "untenable" to continue to fund the TTC through the fare box and property taxes. But he acknowledged that a return to the past 50-50 cost-sharing arrangement is not realistic, at least in the short term, given the provincial deficit.

That's a view backed by provincial government sources who say any arrangement on transit would have to be phased in after Ontario balances its budget.

Toronto's incoming leader brings an end to the frosty relationship between the province and its largest city. The Premier refused to meet with Mayor Rob Ford after he was stripped of most of his authority by city council last year. Although Mr. Tory was the Liberal's rival at Queen's Park as leader the Progressive Conservative party and made an unsuccessful run at her provincial seat, the two describe each other as friends.

Ms. Wynne congratulated Mr. Tory on his election win with a hug and a kiss at an event last week – their first meeting since voting day.

Throughout the long campaign Mr. Tory positioned himself as the candidate who could work with other levels of government and vowed to get Toronto its fair share of funding from the provincial and federal governments in areas such as transit and housing.

Mr. Tory's team is hoping that, with a balanced budget and an election next year, the federal government will be receptive to funding requests from the vote-rich city. Ms. Wynne, by contrast, is facing a $12.5-billion deficit. She must also be careful, because helping Toronto on housing or transit could appear to favour the province's largest city at the expense of other municipalities.

Working in Mr. Tory's favour, insiders said, is that Ms. Wynne's views align with his. The Premier is making a major push to ease the region's traffic congestion, and has also talked about a national housing strategy.

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