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NDP leader Andrea Horwath speaks during a press conference regarding the Ontario budget in Toronto on Tuesday, May 14, 2013.

Nathan Denette/The Canadian Press

Premier Kathleen Wynne will sit down with NDP Leader Andrea Horwath Wednesday afternoon to kickstart formal negotiations over Ontario's budget. The meeting between the two leaders – their first since March 14 – will take place at 2.30 p.m. in the Premier's Queen's Park office.

While Ms. Wynne has already granted most of Ms. Horwath's budget demands, the Liberals are cold towards her latest request that the government drop its plan to set up toll lanes to pay for new subway and LRT lines.

Ms. Horwath made the demand – likely her last – on Tuesday morning.

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Under the Liberal plan, new traffic lanes will allow drivers to bypass congestion on Toronto-area highways. Families and carpoolers will be allowed to use the lanes for free, but solo drivers will have to pay a toll. The money raised would be used to fund public transit expansion.

But Ms. Horwath wants the government to hold off on the tolls and present its entire transit funding plan at once, likely later this year.

"It's far from clear what these tolls will generate," Ms. Horwath said. "Meanwhile, the government does not know what it will cost to install these lanes."

But the Liberals warned postponing such measures would derail the province's ambitions of building a massive new network of transit lines in Greater Toronto and Hamilton.

Transportation Minister Glen Murray pointed to other jurisdictions that have used high-occupancy toll lanes to successfully raise money for transit, and attacked the NDP for not having an alternative plan.

"Our position is quite clear: the HOT is very important. There are many politicians who talk about public transit, but there's only one party with a plan and that's the Liberals," he said. "The HOT the experience in California is very positive. There's no reason to oppose this project."

Finance Minister Charles Sousa said the government's transit-building plans must go ahead as quickly as possible. Among the projects that would be in jeopardy if the government cannot find a new source of transit funding would be a new subway line from Don Mills to downtown Toronto, and LRTs in Mississauga and Hamilton.

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"If we don't continue to make these investments, we will continue to be left behind," he said.

The transit file has been a high priority for Ms. Wynne. Provincial transit agency Metrolinx has spend several years developing its planned network, but the government does not have the estimated $2-billion annually that would be needed to build it.

With the Liberals holding only a minority of seats in the legislature and the Progressive Conservatives vowing to vote against the budget, Ms. Wynne must secure Ms. Horwath's support to pass the budget and avoid an election.

To that end, Finance Minister Charles Sousa put numerous NDP-friendly policies into the fiscal plan, including a 15 per cent cut to auto insurance premiums and more funding for home care.

Ms. Horwath then made more demands, such as giving the provincial ombudsman the power to investigate the health care sector and the creation of a new financial accountability office.

Ms. Wynne has left the door open to granting these requests.

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On Tuesday morning, before Ms. Horwath made her demand on toll lanes, the Premier said she was "optimistic" she can cut a budget deal.

"We have worked with the NDP and I want to continue working with the NDP – but I think right now is the time for a decision and we now have to implement the budget," she said.

The first vote on the budget must happen before the end of the month.

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