173 - Steady Transit Grants from Fuel Tax | Nova Scotia

Summary#

This bill sets up a steady pot of money for public transit in Nova Scotia, starting in 2026.
It takes a set slice of the existing gasoline and diesel tax and gives it to municipalities as yearly transit grants. Towns must put in matching money to qualify.
Cities also get extra bonuses if they grow ridership above 2025 levels and if they build bus‑only lanes or other transit‑only corridors.

Key changes and impacts:

Dedicates an amount equal to 2 cents per litre of gasoline and diesel sold in the prior year to municipal transit grants.
Grants are shared using a formula: 70% based on last year’s ridership and 30% on population.
To qualify, a municipality must match the grant dollar‑for‑dollar and that matched amount must be higher than what it budgeted for transit in 2025–26.
Adds a ridership growth bonus: $1 for every extra trip compared with 2025 (one origin‑to‑destination trip counts as one trip, even with transfers).
Adds a transit right‑of‑way bonus: increases a city’s total grant by 1% for each kilometre of dedicated transit‑only lane or corridor.
Funds can be used for both capital (buses, bus lanes, shelters) and operating costs (drivers, maintenance).
Starts January 1, 2026; funding amounts are tied to fuel tax paid in the prior fiscal year and still must be approved in the provincial budget.

Transit riders
- More stable funding could mean more frequent service, longer hours, newer buses, and better routes over time.
- Cities that add bus‑only lanes may see faster, more reliable trips.
- If your city grows ridership, the $1‑per‑extra‑trip bonus can be reinvested in service.
Municipal governments
- You must match the provincial grant dollar‑for‑dollar, and your matched amount must be above your 2025–26 transit budget level.
- Funding is allocated 70% by ridership and 30% by population, so higher‑ridership systems get more, but smaller places still receive a share.
- You can use the money for operating needs or capital projects.
- If you add dedicated transit‑only corridors, your total grant rises by 1% per kilometre (for example, 10 km = 10% bonus).
- You will need to report ridership data; the Province may use standard data from the Canadian Urban Transit Association.
Drivers
- No new fuel tax is created. The bill earmarks part of the existing gasoline and diesel tax for transit.
- Over time, better transit could ease traffic in busy areas.
Taxpayers
- Because cities must match the grants and increase their own transit spending above 2025–26 levels, some municipalities may shift budgets or raise local revenues to participate.

Annual funding level: equal to 2 cents per litre of gasoline and diesel sold in the prior year (from existing fuel tax revenue; not a new tax).

The total will vary with how much fuel is sold each year.
Grants, the $1‑per‑trip growth bonus, and the right‑of‑way bonus are paid only if approved in the provincial budget.
Municipalities must contribute an amount equal to their grant, above their 2025–26 transit spending.

Provides stable, predictable funding so cities can plan routes, staffing, and fleet purchases with confidence.
Rewards growth in ridership, pushing agencies to improve service and attract more riders.
Encourages faster service through bus‑only lanes and other dedicated corridors.
Uses an existing tax stream instead of creating a new tax.
Balances fairness: big systems get more due to ridership, while the population factor supports smaller communities.

Earmarking fuel tax reduces the Province’s flexibility to fund other priorities in tight budget years.
The strict matching rule may strain small or rural municipalities and could lead to local tax increases or cuts elsewhere.
Tying funding to fuel sales may be less stable as electric vehicles grow and fuel use changes.
The right‑of‑way bonus may favor larger cities that can afford to build bus lanes, leaving smaller towns behind.
New reporting and data requirements add administrative work for municipalities.