A city report released Tuesday recommends improvements for Edmonton's problem-riddled transit system.

The report from the Office of the City Auditor assessed how the Edmonton Transit Service manages its revenue, with a major focus on the bus and LRT fare systems.

It makes eight recommendations, including mitigating fare evasion, finding non-fare revenue opportunities like advertising, and improving how ETS documents revenue management issues.

ETS branch manager Eddie Robar said the recommendations aren't a surprise, and will be fulfilled by next summer.

"We've been on a path of transition at ETS for the past three, four years and [there's] a big progression that is kind of rebuilding the foundation and the way we look at our system," he said at a news conference on Tuesday.

"We want that transit system that people want to take and ride, and we think we've got a good plan to achieve that."

Some buses already have electronic ticket readers, which passengers will be able to use by 2020. (ETS Operations)

One major part of that plan is to implement an electronic smart fare system next year — something the city approved funding for more than five years ago.

"With any technological project, it's a difficult situation," Robar said. "[When] you look at a big transition and something that impacts our travelling ridership so prominently, you want to make sure you get that right before you implement. And that takes time."

The electronic ticketing system aims to gather data on ridership and reduce fare evasion. Between 2.15 and 2.73 per cent of LRT riders checked by transit officers are caught fare evading, the report says.

The cost to operate Edmonton's transit system have grown faster than the amount of money it brings in. (City of Edmonton)

The report said last year, it cost $327 million to provide transit services, up from $105 million in 2000. Total revenue grew from $51 million to $136 million in the same time period.

"The costs to operate the transit system increased faster than revenue. As a result, the transit system is more subsidized today by the tax levy than it was in the past," the report reads.

The tax levy subsidized about 58 per cent of ETS operations last year, compared to 51 per cent in 2000.

The hope is that improving Edmonton's transit system will increase ridership, reducing the subsidy for taxpayers.

"That push to get us to that transit system that people are looking for and grow the ridership of that — we're on the cusp of that," Robar said.

"The next couple of months ... as we get to council with the reports that we have going are really establishing that strategy for transit moving forward and really changing the game for ETS."

The city's audit committee is scheduled to review the audit report on Sept. 6.