Canada: Cuts in federal funding impacting local communities and rail businesses

10 Jun

Public spending cuts are impacting level crossing upgrade programmes as the federal contribution fell from an 80% contribution to one of 50% with effect from April 1st, 2015. In the past this meant that a municipality picked-up 12.5% and the railway owning the rail infrastructure the remaining 7.5%.

Logic suggests that the same ratio should apply to the 50% of costs split between the municipality and the railway to give a local government contribution of 31.25% and the railway the remaining 18.75%. However, the default position assumes a continuing 12.5% from the local administration meaning that the railway would pick-up 37.5% of costs, a five-fold increase. This is the default that the Canadian Transportation Agency can impose if the municipality and the railway infrastructure owner cannot agree.

The greater burden on the local government body and the railway is therefore likely to mean that unless they are able to increase their budgets or level crossing schemes, fewer upgrades will be progressed, slowing the rate at which risk at level crossings is likely to be reduced.

What this means in terms of litigation hasn’t at present been quantified. However, there are concerns that this de facto reduction in federal funding for level crossing upgrades will follow-through with a greater targeting of local authorities and railway businesses as they may be seen as not following-through on community requests for action at specific level crossings, particularly those at which there have been accidents.

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