Underfunded and Overwhelmed: The Struggle for Public Transit Funding in Canadian Cities 

This past August, Montrealers were informed of yet another delay in the city’s optimistic transit projects. After a five year delay and $1 billion over budget – nearly 20% more than originally planned – the extension of the STM Blue Line is now set to be finished in 2031.

Unfortunately, this does not come as a surprise to the residents of Montreal. The city has made multiple plans to expand its public transit system, though hardly any of these plans have been completed. Extensions to the blue, green, and orange lines of the metro, the construction of the Reseau Express Metropolitan (REM) light rail network lines to Brossard, Trudeau airport, and Pointe-aux-Trembles, and a tram system have been proposed. Of these, only the REM line to Brossard has since been finished, albeit a year late and nearly $500 million over budget. 

The future of the other projects proposed by the city is looking bleak. The REM de l’Est project, designed to connect the eastern side of the island to downtown, has since been dropped by its planners. Caisse de Dépôt et Placement du Québec (CDPQ) was given a contract by the City of Montreal to design light rail networks to Deux Montagnes and West Island.  Originally expected to be finished by 2023, the project was first pushed to 2024 –now, following an announcement on November 14, 2024, the project is delayed yet another year. CDPQ Infra, a subsidiary of CDPQ, has said that it would bear the additional costs the project has racked up from the delay; the total project expenses has now reached $8.3 billion, up five percent from last year. 

These public-private partnerships with CDPQ have been the best solution the city can come up with. An institutional investor in pension plans and insurance programs in Quebec, CDPQ seemed like an obvious partner for transit projects. Ideally, any returns from the REM project could be added into pension funds for city residents. Moreover, a substantial amount of capital costs would not be on city books, meaning that half the risk of investment is taken on by a non-taxpayer entity. However, the choice to hand the REM project over to private developers remains a divisive topic for Montreal and Quebec politicians. Although the first line of the REM is one of the only recent transit projects to be completed, some argue that this partnership will give the city and the public less benefits than expected. The CDPQ, rather than the city,  is the majority shareholder on this project, meaning most of the annual returns made will end up in private hands. The government runs the risk of not earning enough returns to cover accumulated interest, in which case taxpayers would have to cover any shortfalls.  

Lionel Groulx metro station in Montreal. “montreal-metro” by Sarah Starkweather is licensed under CC BY-NC-ND 2.0.

To say the recent actions concerning Montreal’s transportation system are controversial would be putting the situation lightly. City agencies and investors have repeatedly blamed the COVID-19 pandemic and rising inflation for repeated delays. Transport Minister Genevieve Guilbault has been working to build institutional capability to finish transit updates more quickly. She has explicitly acknowledged Quebec’s serious problems concerning implementing the public transport infrastructure that urban areas like Montreal desperately need. Guilbault has also acknowledged that Quebec must consider the major funding obstacles it has to overcome in order to see the completion of its lofty transit goals. 

Guilbault is not alone in this outlook. Mayors of northern Montreal have been calling for more “steady and predictable funding” for the proposed transit systems designed to connect their municipalities of l’Assomption, Mirabel, Repentigny, and Deux-Montagnes with the downtown area. They have argued that the Quebec government does not prioritize funding for transit projects, causing the frequent delays that exacerbate problems with traffic congestion. 

Montreal is not the only Canadian city failing to successfully execute public transit planning. Other Canadian cities such as Toronto, Vancouver, and Calgary are experiencing significant budget shortfalls within their respective transportation agencies. Vancouver has recently admitted that planned bus and rail extensions will run $1.2 billion over their original budgets. Calgary faces a similar difficulty, with transit projects expected to be $127 million more than anticipated. The fact that Canadian cities are having a hard time just finishing projects is worrying. Operating costs are a whole other hurdle to clear in terms of reliable funding. Cities are generally reliant on property taxes and passenger fares to cover upkeep. Both of these sources are politically difficult to increase. 

Kipling station in Toronto. “Toronto subway” by Michael Chu is licensed under CC BY-NC-ND 2.0.

The difficulties that Canadian cities are facing with paying for public transit are evidence of larger institutional problems that make paying for public infrastructure more difficult in Canada. Urban public transit systems are more expensive in Canada than in other countries – while Montreal’s Blue line extension will cost nearly $651.7 million per kilometer, cities like Madrid and Seoul are paying less than $120 million per kilometer for construction. Not only are public transit projects disproportionately more expensive in Canada, but they take more time on average. The city of Winnipeg proposed a public transit master plan estimated to take 25 years to complete. The root of this issue is the politicization of transit projects. Because of the NIMBY (Not-In-My-Backyard) effect, locals are generally adverse to agreeing to large projects upfront. This causes politicians to approve of projects step-by-step to avoid making a “significant commitment” early on. This coupled with the fact that steady transit funding is hard to come by, projects quickly turn into a dumpster fire. 

The federal government has partially responded to calls for a more reliable funding base and better institutional support to push projects to finish. In July of this year, Prime Minister Justin Trudeau launched the Canada Public Transit Fund with the goal of investing $30 billion to “expand, improve, and modernize” public transit projects. The major caveat to this fund is that the money is only meant to cover capital costs – cities will still have to come up with solutions to cover operating costs. Despite this new promise of federal funding and local backlash, cities including Montreal are still attempting to solve their money issues with public-private partnerships. The lack of trust between municipal, provincial, and federal governments to support funding initiatives is evident. 

With 2.5 billion people projected to live in urban areas by 2050, cities all over the world are tasked with designing effective transit systems that will keep up with population growth. Canadian cities can’t afford the schedule delays and cost overruns public transportation projects accrue. A serious consideration of the institutional shortfalls that have contributed to these current predicaments is needed now more than ever.

Edited by Lily Molesky

Featured image: McGill metro station in Montreal. “Montreal’s metro” by michellerlee is licensed under CC BY-NC-ND 2.0.