PC budget cancels $1B in transit cash for city

The provincial government's decision to scrap previous plans to doublethe city'sshare of gas tax funding meansOttawa will lose $1 billion for its mass transit plansover the next 30 years.

The announcement that the Progressive Conservative government iscancelling plans to double the fundswhich are expected to totalmore than $36 million for Ottawa in 2019appeared on page 75 of the PCs' first budget, tabled Thursday.

The cancellation appeared to have taken municipalities by surprise.

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The city was counting on the additional money to help pay for its long-term transit plans, including the LRT Stage 2 expansion, approved by council last month.

However, city manager Steve Kanellakostold councillors in an email Friday afternoon that "the LRT Stage 2 project remains financially viable" despite the sudden disappearance of $36 million a year for the foreseeable future.

Liberalpromise

Currently, municipalities receive two cents per litre of the gas tax collected by the province. The previous Liberal government hadvowed to increase that tofour cents per litre by 2021. Last spring, PremierDoug Ford's campaign toldCBCthat a PCgovernment would honour that commitment.

However, Ontario's 2019 budget revealed the PCgovernment had backtracked on that promise.

NepeanMPP Lisa MacLeod, who's the minister for children,community and social services, said her government had to make "tough decisions" when drafting the $163-billion budget.

"I think we made the right choice," she said, adding that Mayor Jim Watson is "pleased with our budget."

She also said she's a "big proponent" of Stage 3LRT, which would extend rail transit to Kanata and MacLeod's own community of Barrhaven.

Earlier concerns

At a special council meeting February to discuss the $4.66-billion LRTStage 2 project, Coun. Diane Deans raised concerns about thepossibility of thePC government changing its policy on gas tax funding, which the city has been counting on to help pay for LRT Stage 2.

She was told by the city manager that "silence is golden." He said the government had given no sign of that sort of change, whichwould create major issuesfor municipalities across Ontario.

"Well, how golden was that silence?" said Deans in an interview Friday.

"Thirty-six million dollars a yearover 30 yearsis $1 billion, and that's money that the municipality really can't afford to take on," she said.

"Does it put the whole project into jeopardy?Probably not. But does it put our taxpayers in a very negative position? Yes, absolutely."

Short-term impact 'manageable'

In his memo to council,Kanellakoswrotethat the impact of losing the additional gas tax funds is "manageable"over the short term, but projects beyond LRT Stage 2 "could be impacted."

That statement is at odds with the city report released in February on LRT Stage 2 financing, whichsaid the "affordability model" was based on doubling of the city's share of provincial gas taxes.

Kanellakossaid city staff are assessing the implications of the shortfalland will provide council with a report in thecoming months.