New Canadian federal budget reallocates undisclosed amount of dedicated transit dollars to general infrastructure fund

The government of Canada released Budget 2025: Canada Strong, its new plan designed to shift its trade more globally while making adjustments to how transit will be funded in the country going forward.

To tackle its goal of being Canada Strong, Canada’s government says it’s delivering an investment budget. It includes a total of C$60 billion (US$43.01 billion) in savings and revenues over five years, and makes investments in housing, infrastructure, defense, productivity and competitiveness—though the way it plans to invest in transit has changed.

A new plan for transit funding

Transit projects were to be funded from the Canada Public Transit Fund, an account that was set to receive C$3 billion (US$2.2 billion) annually starting in the 2026-27 fiscal year after its 2024 creation. The fund was designed to exclusively back public transportation projects. However, the new budget adjusts how much is going into the fund and how public transit projects can get funding from the government.

While transit projects will still be funded within the new 2025 budget, some of the funding that was supposed to be deposited into the Canada Public Transit Fund will be reallocated to the Build Communities Strong Fund. At this time, how much will be diverted remains unknown. Money that is being diverted into the new fund was uncommitted in the Canada Public Transit Fund at the time the budget was drafted, though projects that already had signed commitments through the initial fund are expected to remain intact. 

The new general infrastructure fund can still support transit projects, though it’s not exclusive to them like the Canada Public Transit Fund dollars, nor is a portion specifically allocated for transit alone. The budget text explains that the move is in an effort to streamline “burdensome” requirements hosted in the Canada Public Transit Fund that may slow down project delivery.

Initial reactions

Transportation associations throughout Canada responded to the adjustments with concern, stating the $3 billion committed was already going to likely come up short due to inflation, tariffs and global conditions. While advocates agreed that reducing excess regulatory roadblocks could benefit project delivery, they shared worry that goals for zero-emission transitions may face delays or slip away without strong, dedicated funding sources. Canadian Urban Transportation Research and Innovation Consortium President and CEO Josipa Petrunic called for the Canadian government to increase funding to the Canada Public Transit Fund, not reallocate it, in an interview with Mass Transit magazine the day after the budget was released.

“We asked to raise it to at least five [billion],” Petrunic said. “We know there’s over $30 billion already in the pipeline up to 2040 for just zero-emissions procurements. If you add up all the cities, there’s about 30 plus of them… that want to buy electric buses—they’ve started, but they need to buy a lot more. They want to buy hydrogen buses and they have a climate target goal of 2040—just the modeling work we’ve done in the cities we’re working with, if they pursued the goals in the reports that we prepared with them… and they actually go to buy all that stuff, they will need about $2 billion more per year to hit their zero-emissions targets by 2040.”

Petrunic continued, explaining that no city has abandoned their goals, just that inflation and tariffs have “taken a bite out of their dollars” at a time where they don’t have new revenue streams. This is in addition to burgeoning ridership numbers and increasing population figures from a record-breaking year of immigration that may require larger fleets or more service, causing agencies to possibly slow zero-emission procurements due to lacking funds when they need it most.

Canada Public Transit Fund dollars officially redirected

On Dec. 1, the Canadian Urban Transportation Association (CUTA) reported that funds were in the process of being reallocated, though the amount was still unknown with no further guidance given to cities about the spread of transit funding going forward. CUTA urged the Canadian government to provide “clear, predictable information” on the funding of public transit going forward, citing that projects well past the planning stage, some even already under construction, while their funding future remains uncertain.

“Transit is economic growth, affordability and environmental progress all at once,” said CUTA President and CEO Marco D’Angelo. “Communities have already planned around the federal commitment that was made. Agencies are ready to deliver, manufacturers are ready to build and cities are ready to grow. What we need now is clarity from Ottawa and a dependable flow of funds beginning April 1, 2026. Keeping this promise strengthens the entire country.”

CUTA has offered two solutions for how the issue could be handled by the federal government:

1. For the full public transit envelope under the Canada Public Transit Fund to be maintained structurally as it were.
2. For it to create a protected transit stream within the new Building Communities Strong Fund for projects to tap into.

The association says it has committed to working with federal, local, industry and agency partners to establish security and clarity for funding public transit going forward. Mass Transit magazine will continue to follow the story and provide updates as the Canadian federal government provides further information.