I think if we want to get really serious about sustainable transit funding, we'll have to look at our fare system, and make some hard choices. In my experience, many places in the world with the geographic size and population density of Toronto have some sort of distance-based fare structure. Within Toronto, you could travel up to 35 km for $2.90, which seems way too low for that distance. A GO transit ride within the city usually runs just over $6.
With Presto, and tap in/tap out being possible, we have the technology to have distance-based fares without zones. You tap in at one station, tap out at your destination, and then the system calculates your point-to-point distance and assigns a fare. For example, you could have fares that are between $2 and $6 as below:
<5 km = $2
10 km = $3
15 km = $4
20 km = $4.50
25 km = $5
30 km = $5.50
35 km = $6
* $0.20 per km between 5 and 15 km, $0.10 per km between 15 and 35 km.
This means that people taking shorter trips pay almost a dollar less than today, and those taking what I assume is an average commute of 15 km, pay a dollar more. Those traveling over 15 km get a lower per km rate, so there is still technically a discount for longer distances. As well, with fare integration, you would pay the same fare whether you use a subway, LRT, or GO train, thus incentivizing people to use RER for longer trips within Toronto, and putting less burden on the subway system (assuming RER will be 10 min frequencies, all-day, in both directions). You could also make this GTA-wide, so there are no cross-border double fares.
One big issue that would have to be figured out is bus (and streetcar) transfers. You could either go tap-out on buses, or keep a flat fare and put a discount on transfer to/from buses. Something that won't cost the person more or too much less on long-distance trips.
In my opinion, the province is tapped-out for cash, and has some worrying debt issues. Tax hikes, new taxes, and other funding sources probably won't even cover all the capital costs of new projects. This may be difficult politically, but I think a fare system similar to this is necessary if we want to get really serious about making transit more sustainable.