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A northbound Spadina streetcar picks up passengers near Front St West in downtown Toronto on February 27 2012.

Fred Lum/The Globe and Mail

Toronto transit riders are facing a five-cent fare increase and the threat of labour disruption by workers angry about the commission's decision to contract out bus cleaning.

The TTC's board voted Thursday in favour of a proposed 2013 operating budget that includes an inflationary fare hike in principle.

If passed by the end of the year, the fare hike will raise the price of a token from $2.60 to $2.65 and the cost of a weekly metropass from $37.50 to $38.50.

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The change will not affect cash fares.

The commission's discussion around budgeting and fares was tame compared to a heated debate over privatizing bus servicing and cleaning, which TTC staff estimate will eventually save the transit agency $4.3-million a year.

The commission voted 4-3 in favour of contracting out, prompting TTC union boss Bob Kinnear to accuse the transit agency of declaring war on its workers.

He threatened to fight back with unspecified job action.

"We're not ruling out anything right now. Everything is on the table," said Mr. Kinnear, the president of Amalgamated Transit Union Local 113.

TTC workers cannot legally strike because the province deemed Toronto's transit system an essential service last year.

"This is far from over," Mr. Kinnear told reporters, while dozens of his members clapped and cheered in the background. "We may have lost the battle but we sure as hell won't lose the war."

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The TTC's bus cleaners currently earn a starting wage of $21.06 an hour. They earn a top rate of $27.66 an hour after two years on the job, according to TTC spokesman Brad Ross.

It is not known how much the new private-sector cleaners will make.

The confidential contracts approved Thursday would see cleaning at two of the TTC's eight bus garages turned over to the private sector for a projected savings of $1-million in 2013.

If the initial outsourcing goes well, the TTC intends to ask private contractors to take on cleaning at all eight garages, saving $4.3-million a year and displacing 159 staff, all of whom would be transferred to other posts at the TTC, according to Mr. Ross.

TTC chair Karen Stintz said that in an era of austerity, the transit agency had little choice but to seek savings through outsourcing.

"We are all being asked to do business a little bit differently and we've all got to figure out how we're going to do it," Ms. Stintz told the commission. "Because this is not the end."

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Fiscal constraints also contributed to the commission's approval of a fare hike in principle.

Between the TTC's pledge to maintain service levels and the city's promise to freeze its contribution to the transit agency at 2012 levels, the TTC has scant fiscal wiggle room, according to chief executive officer Andy Byford. The fare increase will rake in an extra $18-million.

"I'm sure my customers wouldn't want me to cut the service. I'm not going to get any more subsidy, which ultimately comes from the taxpayer," Mr. Byford said. "We are finding efficiencies. So I think it's only fair that we should look to some contribution from our customers, but we'll limit it to the absolute minimum."

The TTC raised fares by 10 cents last year. Fares were frozen in 2011 and went up by 25 cents in 2010.

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