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An electrician stand sin an opening while pulling communications cable through an electrical conduit under the Eglinton Crosstown LRT near Sinnott Rd. on Jan. 5, 2021.Fred Lum/The Globe and Mail

The federal government is promising to spend $5.9-billion on transit-related stimulus projects and is creating a permanent transit transfer worth $3-billion a year for municipalities.

Prime Minister Justin Trudeau made the announcement Wednesday along with the federal infrastructure and environment ministers, Canada Infrastructure Bank chair Tamara Vrooman and Edmonton Mayor Don Iveson.

The $5.9-billion will be allocated in the short term based on submissions for new projects, rather than by population. The formula for allocating the new $3-billion transfer, which will begin in 2026, will need to be negotiated with municipalities and the provinces. In total, the government said its announcement adds up to $14.9-billion in new transit funding over eight years.

Mr. Iveson, who chairs the Federation of Canadian Municipalities’ big city mayors’ caucus, said the permanent transfer responds to a long-standing request from cities and the $5.9-billion in short-term funding will mean new transit projects can be part of a postpandemic economic stimulus plan.

“It can be the centerpiece of the job-creating, emissions-reducing recovery that Canadians are looking for,” he said.

Cities have been calling for a permanent transit transfer because the federal government’s main infrastructure funding plan, worth about $188-billion over 12 years, is currently only budgeted through to the 2027-28 fiscal year. Wednesday’s announcement means the transit portion of that program will continue indefinitely.

Such long-term spending promises come with the caveat that they extend beyond the life of the current Parliament, meaning the Liberal government can’t guarantee what Ottawa’s spending priorities will be over the long term.

“We need efficient and modern public transit systems that make our communities more connected,” Mr. Trudeau said. “These investments will support major public transit projects like subway extensions, and help electrify fleets with zero-emission vehicles. They will also be used to meet the growing demand for walkways and paths for cycling, and help rural and remote communities deliver projects to meet their mobility challenges.”

The federal government’s fall economic statement said Ottawa was planning to spend between $70-billion and $100-billion on economic stimulus over the next three years. That update also said the federal deficit could approach $400-billion this fiscal year.

Toronto Mayor John Tory praised the federal announcement but said he was waiting to see the details around how the funding will be allocated. Divvying up the money based on transit ridership, as the federal government has done in the past, would mean the bulk of this funding going to Toronto, Montreal and Vancouver.

“I am confident that Toronto will receive its fair share of funding from this initiative,” Mr. Tory said in a statement released by his office. “Our share of this investment will mean transit expansion, transit vehicles and other system upgrades, jobs and a greener city.”

Ridership at the Toronto Transit Commission, the country’s most heavily used agency, fluctuates but remains far below normal. The latest figures from the TTC show ridership is at about 25 per cent of prepandemic volumes. As a result, the agency’s weekly revenue is hovering around $18-million less than normal.

Marco D’Angelo, president of the Canadian Urban Transit Association, which represents dozens of Canadian transit agencies, said the predictability of long-term funding “will solve many of the hurdles and delays that currently plague transit being built.” But he also warned the problems facing transit go beyond expansion funding.

“Revenue is down significantly due to pandemic-related ridership declines and funds from the federal and provincial government to help keep service going expire next month in most provinces,” the group said in a statement. “CUTA is asking the federal and provincial governments for ongoing operating support until ridership returns.”

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