There’s been a lot of talk about the need for the Province to restore the 50-50 transit funding agreement. But what does this raffle-sounding policy actually mean? And how much might it cost the Province?
The 50-50 funding agreement was a partnership between the Province and municipalities that operated transit systems, under which the Province would cover half of operating costs for conventional and accessible transit, after service revenues (mostly from fares) were deducted. Operating costs are the day-to-day expenses of running the transit system, primarily the salaries and benefits of the workers who operate, maintain, clean, and administer it. It can be easier for municipalities to attract funding from higher levels of government for capital projects, such as buying buses and building transit garages, but this infrastructure risks underuse without sufficient operating funding.
That’s where 50-50 funding comes in. Think of 50-50 like how governments cost-match donations to the Red Cross during a disaster: it encourages spending, doubles the effectiveness of each dollar, and provides extra visibility to an important cause. It’s also similar to how the federal government partners with provinces and territories to match funds for infrastructure, such as housing and hospitals.
The 50-50 matching transit funding is important because the Province is in a much better position to raise revenue (such as through personal or corporate income taxes) than municipalities, which primarily rely on a mix of property taxes and user fees (including transit fares).
The History of the 50-50 Agreement and Decline in Provincial Transit Funding
The policy was first introduced in Manitoba in the 1970s to incentivize municipalities to create and strengthen transit systems. Since then, it has been cancelled and reintroduced several times. The agreement was first terminated by the PCs in 1993, but was reintroduced in 2007 by the NDP to improve the affordability and accessibility of transit; a year later, the government even amended provincial climate change legislation to mandate it. In 2017, the PCs once again ended the agreement and froze dedicated transit funding at 2016 levels.
Since 2016, explicit provincial funding for Winnipeg Transit operations has remained at $42 million per year (compared to $86.6 million by the municipality), while Brandon Transit receives $2 million per year (compared to $5.6 million by the municipality). A decade of inflation has further eroded the value of these provincial contributions by about one-quarter, representing a slow but steady cut. In the case of Winnipeg Transit, municipal spending on operations has increased from 1.25 times greater than the Province in 2016 to more than 2 times greater in 2026 (See Figure 1). Along with downloading a greater share of financial responsibility onto the municipalities, it has also led to increased dependence on fare revenues.
Figure 1
The PCs replaced dedicated transit funding with a broader, unconditional “basket funding approach” allowing municipalities to spend operating grants on a wide array of competing services. While municipalities may be using provincial funding from the “basket” to fund transit above and beyond the long-frozen dedicated dollars, it’s wholly unknowable and unaccountable. Former head of Functional Transit, Joe Kornelsen, warned in 2017 that “once they say there’s no longer a specific amount for transit, then that money could just sort of be slipped away and lost into other programs.” By contrast, the 50-50 funding agreement provides the Province far greater control over how municipalities use its dollars, and leverage to attract municipal investment.
And such leverage is urgently needed, given that Winnipeg Transit, by far the largest transit system in the province, spends far less per capita on operations than other large cities in Canada (see Figure 2). Much more funding is needed to help trigger a “virtuous cycle” of ridership growth.
Figure 2
Our 50-50 Transit Funding Demand
Any restoration of a 50-50 funding agreement will have to be done carefully, to avoid municipalities reducing their funding of public services and achieving no net improvement in transit service. Rather than a backdated top-up of provincial transit funding since the 50-50 was cut, we’re proposing that the Province restart the 50-50 funding agreement at present spending levels, such that half of all new operating expenditures not covered by service revenues would be paid for.
The Province should also consider other eligibility criteria for cost-matching, such as transit systems being publicly or community-owned rather than provided by private contractors, and offering fixed-route service. Extra funding from a restored 50-50 agreement would be on top of, not replacing, current and growing provincial grants to municipalities. The Province should make it available not only to municipalities with existing transit systems—such as Winnipeg, Brandon, and Selkirk—but also to urban and rural municipalities, First Nations, and tribal councils that may want to establish new transit services.
As acknowledged by the City of Winnipeg in recent calls for the restoration of the 50-50 agreement, benefiting municipalities could also work with the Province to increase branding on transit infrastructure, including buses, “to ensure the Province of Manitoba is rightfully and properly recognized for said 50/50 funding.”
How Much Would It Cost The Province?
The costs to the Province of restoring 50-50 funding using such a model will vary considerably based on a few key factors, including:
- The number of existing and new transit systems in Manitoba
- How much municipalities increase transit operating spending by
- Supportive transit policies, such as dedicated bus lanes and transit signal priority
- Increases in ridership and corresponding fare revenue
For the sake of illustration, we rely on Winnipeg Transit’s latest budget, as it would be the biggest potential beneficiary of the restoration of 50-50 funding (and it offers by far the most detailed budget of any Manitoba municipality that currently provides transit service). We assume that service revenue, which is largely made up of fares, will only increase at half the rate of new spending, as it can take years to (re)build trust and confidence in a transit system. To provide a ballpark, we then double that amount to arrive at an estimate of what province-wide costs could be if transit service were linearly expanded, as Winnipeg’s population is roughly half of Manitoba’s. These calculations aren’t intended to be exact, as future scenarios are hypothetical, but rather provide estimates of what costs could be.
Here is the estimated additional provincial spending required in 2027 if the Province reinstated the 50-50 agreement for all of Manitoba, with existing and new transit systems outside Winnipeg receiving the same amount of money together as Winnipeg Transit would:
Status-Quo Scenario: $5.1 million
10% Increase to Operating Expenses, 5% Increase to Ridership/Fares: $18 million
25% Increase to Operating Expenses, 12.5% Increase to Ridership/Fares: $45.1 million
50% Increase to Operating Expenses, 25% Increase to Reduced Ridership/Fares: $90.1 million
Clearly, there is a sizable range in the cost to the Province of reinstating 50-50 funding. However, even the highest investment illustrated would still cost only one-quarter of the revenue the Province lost through its 2024 gas tax cut. And remember: this provincial spending would double new spending by municipalities and equivalent bodies, likely leading to significant improvements in transit service, ridership, and reductions in transportation-related emissions. Below is a chart of how these scenarios would impact transit operations in Winnipeg specifically.
Figure 3
If Winnipeg Transit reached annual operating spending of about $350 million per year, which would require a 50% increase from 2026 levels, this would elevate its per-capita spending to that of Edmonton. It would have to increase spending by 200% to reach the per-capita amount spent by Toronto, Vancouver, and Ottawa.
As we outlined in another recent blog post, the Province’s $10 million commitment to eliminating transit fares for high school-aged youth is a good start. But transit service levels must be considerably improved for there to be a meaningful change in ridership. For that to happen, the Province needs to once again cost-match fund transit operations in Manitoba—along with increased support for capital investments in things like buses, transit garages, and bus shelters—providing the long-term stability necessary to kickstart transit becoming a real mobility option and climate solution.
Data for charts available here.