Staff Report #2
November 17, 2025
To All Commissioners
Re: Federal Budget – Canadian Permanent Transit Fund Update
Recommendation
That the report be RECEIVED for information.
Background
The Federal budget, announced on November 4, 2025, introduced changes to the Canadian Permanent Transit Fund (CPTF) which, from a transit perspective are not favourable. Through the Canadian Urban Transit Association (CUTA) transit agencies across the country have advocated for a permanent federal funding stream for transit projects that would provide for the certainty required to develop and deliver on multi-year capital plans.
At the time, the CPTF was announced, it was heralded as a historic investment that will support transit in communities of all sizes across Canada. The Fund will provide $3 billion per year for public transit and active transportation infrastructure, beginning in 2026-27. The Fund will provide stable and predictable funding to address long-term transit goals and aims to:
- Increase the use of public transit and active transportation relative to car travel
- Increase the housing supply and affordability as part of complete, transit-oriented communities
- Help mitigate climate change and improve climate resilience
- Improve public transit and active transportation options for all, especially Indigenous People and equity-deserving groups.
Subsequent to the initial announcement of the CPTF, additional details were provided with respect to how the funding would flow as well as the guidelines associated with the funding. At that time, the CPTF was split into three distinct streams, each of which is explained further below.
Baseline Funding – provides predicable, long-term funding to communities with existing transit systems to support routine investments, with an expected focus on public transit and active transportation system expansions, improvements and state of good repair.
Targeted Funding – provides flexible, call-specific funding to address federal priorities that meet local needs. Funding will cover areas such as rural transit, active transportation and zero emission solutions.
Metro-Region Agreements – will support the long-term development of public transit infrastructure in large urban areas. Through these agreements, the federal government will allocate funding and work with Provincial partners to support the planning and construction of a broad range of projects, including major expansion.
The Federal Budget tabled on November 4, 2025 calls for the creation of a new Building Communities Strong Fund (BCSF), a broad infrastructure program valued at $51 billion over 10 years, and the government has chosen to redirect previously earmarked transit funding from the CPTF into this larger, multi-purpose framework. What was not clear in the budget document and remains unclear at time of report writing, is the extent of funding that has been removed from the CPTF in order to support this new program.
CUTA continues to seek further clarity with respect to the impacts on the CPTF, and what has been shared to date is that the Baseline Funding Stream will not be impacted by the re-allocation. The extent to which the Metro-Region Agreements and Targeted Funding streams will be impacted remains unclear (see CUTA’s response to Federal Budget set out in Enclosure I).
London had not made any application to the Metro-Region Agreements stream prior to the budget announcement and as such, no specific projects will be negatively impacted with this realignment. The Targeted Funding Stream however had been identified as a potential source of funding for the Zero Emission Bus Pilot Program, noting the previous Federal Government Zero Emission Transit Fund, which was the original source of funding was cancelled prior to London being in a position to apply. Given no funds from this stream had been allocated (application was never opened), it is likely this stream will see significant reduction or possibly elimination as part of this re-allocation of funding.
Administration will continue to work with CUTA to seek clarification on the impacts to the CPTF and will provide update reports as appropriate.
Enclosure
I – CUTA Response to Federal Budget
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager