City council may have ended the debate over one controversial Scarborough subway this week, but the dispute over a second one may be heating up.

The Star has learned that the province has asked Ottawa to withdraw $330 million in federal funding from the Sheppard LRT project and reallocate it to the Finch West LRT.

According to a spokesman for Ontario Minister of Transportation Steven Del Duca, the province made the decision in order to meet the new federal Liberal government’s eligibility criteria for infrastructure funding. Queen’s Park insists the $1-billion Sheppard LRT is still funded in its long-term fiscal plan, and the provincial transit agency Metrolinx says it is moving ahead with the light rail project.

But removing the federal funding could spur a renewed push from local politicians who want to scrap the Sheppard LRT and extend the existing Sheppard subway line into Scarborough.

“The decision to reallocate funds came as a result of the Federal government’s request to shift their Building Canada Fund to ready-to-proceed projects,” wrote Patrick Searle, Del Duca’s spokesman, in an email.

He said that the province risked losing the funding if it wasn’t moved to a shovel-ready project and that “the recommendation was made to redirect the funds toward Finch as it is ready-to-proceed at this time.”

According to a government source, the province made the reallocation request on March 10, but it wasn’t made public because the change hasn’t been finalized by the federal government.

But Mayor John Tory’s office was informed the province was considering reallocating the funds to Finch as early as February. Speaking to reporters after Wednesday’s council meeting, he referenced the decision as possible indication the Sheppard LRT was in jeopardy.

At the meeting council voted to forge ahead with a $3.2-billion, one-stop extension of the Bloor-Danforth subway line to the Scarborough Town Centre, but also voted for a study of a Sheppard subway as part of the city’s long-term transit plans. The report, which Tory voted for, is due early next year.

Asked whether he thought asking to study a subway on a route that the province has committed to build an LRT on might provoke Queen’s Park into abandoning the project, Tory said, “I’m probably more concerned with the fact that some of the federal money that was allocated over there has been shifted over to Finch and that that means that that government is at present not a contributor to the project.”

He added that “right now we’re doing nothing on Sheppard.”

Asked earlier in the day about reviving the Sheppard subway debate, he said “any plans for expansion (on Sheppard) have been mothballed, but is doing nothing the plan going forward, or is it something else?"

Tory has repeatedly used the provincial and federal government’s buy-in on the Scarborough subway project as justification for pursuing the controversial plan.

Councillor Jim Karygiannis, who moved the motion on Wednesday to study the Sheppard subway and is one of many city and provincial politicians who prefer an underground line to the LRT plan, told the Star he saw the reallocation of the federal funds as proof the province is abandoning the LRT.

“That shows that they intend on building a subway,” he said. “They clearly have seen there will be a subway there. They want to move the money to somewhere else.”

Council voted to build a Sheppard LRT in 2012, in a politically explosive revolt against then-mayor Rob Ford, who backed a subway line. At the time, ridership projections prepared by the city showed a Sheppard subway extension would carry just 4,200 passengers at its busiest hour in its busiest direction, well below the capacity of a subway.

According to the terms of the LRT master agreement signed between the city and province in 2012, construction on Sheppard was to start in 2017 with service starting by 2021, and the project would be built with $333 million in federal funding and about $650 million from the province.

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But in spring 2015, the province set off speculation over the fate of the plan by deferring it. The government announced it wouldn’t begin work on the Sheppard LRT until after the Finch project was complete, in 2021.

Council voted Wednesday to ask Metrolinx to clarify the timeline for the delivery of the Sheppard LRT. Asked for a firm delivery scheduled on Thursday, a spokeswoman for the agency referred the Star to previous comments made by Metrolinx officials who stated the line will be built after the Finch LRT.