The Ontario government cancelled $1 billion in funding for Hamilton's light-rail transit system on Monday, killing it amid a chaotic afternoon that included a hastily cancelled news conference, city councillors facing down police and Transportation Minister Caroline Mulroney leaving the city with a police escort.

Mulroney left without actually making her announcement. Her press conference was called off at the last minute when protesters, anticipating that the LRT would be cancelled, filed into the room at the downtown Sheraton hotel.

It was Hamilton Mayor Fred Eisenberger, who had only just been briefed by the province, who told the room.

"In my view that's a betrayal of the city of Hamilton," he said to reporters. "That is not working in good faith with a partner."

"Their timing on this is just outrageous," said Eisenberger. "If they were going to do this, they could have picked a better way."

A police officer talks to Couns. Maureen Wilson and John-Paul Danko in the lobby of a government building where Mulroney relocated after the news conference was cancelled. (Samantha Craggs/CBC)

Provincial staffers moved Mulroney to a government building across the street. Two city councillors followed, refusing to leave the lobby until they were allowed to hear the technical briefing.

The property manager called the police, but even as officers arrived, Couns. Maureen Wilson and John-Paul Danko — of Ward 1 and 8, respectively — stayed.

"My constituents demand answers and my job is to give them that information," Danko said. "For the minister to come to Hamilton and not be prepared to face the public or face council, that's just ridiculous."

Mulroney left in a police-escorted car.

Eisenberger described the project as a massive investment for the city that would have "created hundreds of jobs," provided economic uplift, cut carbon dioxide emissions and added to affordable housing.

It has been in the works since 2007, and would have run 14 kilometres from McMaster University in the city's west end to Eastgate Square.

The previous Liberal government pledged $1 billion for the capital costs. Premier Doug Ford said his Progressive Conservatives planned to follow through, and the project was in the spring budget. The regional transport agency Metrolinx spent $162 million on it so far.

Mulroney said later in a statement a third party hired by the PCs had determined the LRT would actually cost an "astonishing $5.5 billion."

She alleged the Liberals and former transportation minister Steven Del Duca "were not upfront" about the LRT.

Del Duca, now running for the head of the Ontario Liberals, did not address the cost estimates. But in a statement said Ford has "been searching for a way to kill the Hamilton LRT."

The provincial estimate includes almost $2 billion in costs like operating and maintenance, covering the lifespan of the project, while the original $1 billion figure was only for the capital cost of building it.

Mulroney said the previous Liberal government misrepresented the true cost of the project. (Chris Young/Canadian Press)

Asked by CBC's Mike Crawley if the province added those costs to justify the cancellation, Mulroney said:

"We aren't trying to kill the project. We worked very hard to find a way to move forward, to be able to deliver on it. But it's clear the numbers we inherited misrepresented the true cost of the project."

In her statement, Mulroney said the $1 billion is still available for transportation in the city. She said a task force, the members of which are to be announced, will by the end of February produce a list of other projects that can be "delivered quickly and in a fiscally responsible manner."

Eisenberger said about 40 employees being funded by Metrolinx will no longer have jobs, and that three consortiums — short-listed to bid to design, build, finance, operate and maintain the system — have been told to "park their pens."

He noted that other transportation projects, though "more expensive than advertised," are still going ahead in Mississauga and Toronto.

Andrea Horwath, Ontario NDP leader and Hamilton Centre MPP, said her party will fight "like hell" to save the project.

"What this premier likes to do is make up numbers to justify their cuts," she said.

We won’t be hearing from Minister Caroline Mulroney — she just left the building. <a href="https://twitter.com/hashtag/HamOnt?src=hash&ref_src=twsrc%5Etfw">#HamOnt</a> <a href="https://twitter.com/hashtag/HamiltonLRT?src=hash&ref_src=twsrc%5Etfw">#HamiltonLRT</a> <a href="https://t.co/3Z8iA2PqVp">pic.twitter.com/3Z8iA2PqVp</a> —@bobbyhristova

Lynda Lukasik, Environment Hamilton executive director, was baffled that the crowd had to get the news "second-hand from the mayor of the city."

"What kind of a democracy is this where a major undertaking like this for our community, we all show up here and the minister isn't even respectful enough to come talk to people directly?"

Donna Skelly, the PC MPP for Flamborough-Glanbrook, was with Mulroney and she wanted to go out and speak. But there was concern the situation was "going to escalate," she said.

My statement on <a href="https://twitter.com/hashtag/HamOnt?src=hash&ref_src=twsrc%5Etfw">#HamOnt</a> LRT: <a href="https://t.co/jCLXcvR5qd">https://t.co/jCLXcvR5qd</a> <a href="https://t.co/YP7lRdDh5D">pic.twitter.com/YP7lRdDh5D</a> —@HamiltonsMayor

Skelly said the $1 billion for transportation-related projects is "a really, really good deal" for Hamilton.

"I think taxpayers have dodged a bullet when we finally recognized the cost of the LRT project. It simply was unaffordable," she said.

Kris Jacobsen, the city's LRT project head, said his staff told the province to let them know if the project was overbudget and they could talk about where to trim it, and "we never really received anything."