Edmonton Mayor Don Iveson is praising the federal government for loosening the strings that have long been attached to funding for transit projects.

In Tuesday's budget, federal Finance Minister Bill Morneau revealed the Liberal government plans to spend $3.4 billion over three years for transit projects.

Iveson said the projects no longer have to be shovel-ready and money will be allocated according to ridership. Ottawa will also pay more — half of the cost, up from to one-third.

Iveson hailed the change as a "transformative policy shift." He said changes in eligibility and the funding formula are what cities have been asking for.

He credited his former colleague on council, Transportation Minister Amarjeet Sohi.

"The government has listened and heard us on that and I think that's in no small part due to Minister Sohi's background and understanding of those issues municipalities face," he said.

Iveson said the money could be used to refurbish and replace equipment and upgrade the Coliseum and Stadium transit stations.

The money could also be used for design and planning work, he said.

"If that next level of design work is able to help us advance planning for the west LRT or whatever leg council deems worthy of proceeding with next, then we can use it for that."

Metro Line

Iveson says federal transit funding could be used to plan the next leg of the LRT. (Lydia Neufeld/CBC )

Social housing investments

The budget also promises money for affordable housing, which is in short supply in Edmonton.

The Liberals say they will invest $2.3 billion in building and renovating social housing over the next two years. The money will also support shelters for victims of violence and increase the number of affordable housing units for seniors.

Greg Dewling, the CEO of the Capital Region Housing Corporation in Edmonton, is pleased the Liberals want to invest in this area.

"They are showing us that they're willing to invest and address the backlog in social housing and address the demand that is rising quickly in some of the urban centres," he said.

Dewling says his organization has 4,300 families on a waiting list for housing.

The money means construction can start on two shovel-ready projects this year,  a 70-unit project in Parkdale-Cromdale and a second project in Kilkenny.

The budget also sets aside $30 million over two years for rent subsidies distributed through federally administered social housing providers.

Dewling says his organization administers 3,500 rent subsidies in Edmonton.