TTC operating costs are funded mostly from the fare box, but the extra is 100% funded by the City of Toronto. The government of Ontario used to provide funding for operations, but McGuinty eliminated it for 2010.
The city receives most of it's money from property taxes. Those living north of Steeles aren't paying property taxes to TTC, so any additional cost beyond farebox recovery north of Steeles should be paid either by Region of York, or by increased fares. Presumably TTC will eventually identify the additional cost, and will ask York Region to pay it. If York Region refused, they'd simply raise the entrance cost for those 2 stations, and require passes using those stations to have a higher cost (or perhaps the express sticker ... or something).
Seems pretty simple to me ...
I think your funding calculations are a bit off.
Firstly, McGuinty has nothing to do with this. Mike Harris cut the operations funding over a decade ago. Nothing changed this year.
Secondly, I stand to be corrected but I believe something like 75% of TTC revenue comes from the farebox. (Which is crazy, but that's what it is.)
So, when you include advertising and parking funds, it's a real minority of funding coming from property taxes.
Thirdly, your entire argument about what York Region should pay, and what would happen if they refused is rendered moot by what I posted previously: The project IS operating under the assumption the TTC will pay ALL operational costs and get ALL of the revenue. So if someone boards the subway in Vaughan after parking their car, the TTC gets all that money. That's just what the deal is, whether Toronto taxpayers like it or not.
I mean, if York Region is going to pay the costs, does that mean it will be YRT people manning the booths in Vaughan? Should the TTC drivers get off so YRT people can drive the subway for 2 stops?
It seems simple when you lay out a certain way, but it's not really. I could argue that a Toronto resident who takes YRT to work in, say, Markham, should have to pay a fare when they board at Finch Station and then another when they cross Steeles, since they're not paying taxes in York Region. That SEEMS simple, but it doesn't really make sense, does it?