Many municipalities and transit associations applauded the Conservative government's $500-million boost for public transit in Tuesday's budget, calling the extra money a pleasant surprise.

"It's a good day for municipalities. We are very pleased with this budget," Gord Steeves, president of the Federation of Canadian Municipalities, told CBC News.

"Frankly, we didn't expect anything in this budget on the issue of transit," he said.

The funds are set aside for construction-ready public transit projects, meaning initiatives either already announced or where municipal commitments were to be made by the end of March.

Projects allotted money include:

• The Evergreen Light Rapid Transit System in Vancouver.
• The re-establishment of a rail link between Peterborough, Ont., and Union Station in Toronto.
• New equipment and upgrades to dedicated rapid transit routes for the Aéroports de Montréal.

Steeves said he was particularly surprised and pleased that the gas tax transfers to municipalities will be made permanent past 2014.

The fund, introduced in 2004, provides municipalities with a portion of federal gas tax revenues that they can use on public transit, water and wastewater infrastructure and local roads. 

The Canadian Urban Transit Association also praised the allocation of $500 million as a major boost for 2007-2008.

"We're very pleased," Michael Roschlau, president of the industry group, said. "It's very important in getting projects that have been waiting for funding off the ground and moving."

But Calgary Mayor Dave Bronconnier said he wished more money had been provided.

"Big city mayors, we've been calling for $2 billion annually and what have they come up with? $500 million. Significantly short of what's required to get the job done."

Vancouver's light rapid transit system is expected to cost billions, but it will only get about $66 million from the federal government. Still, B.C. Finance Minister Carole Taylor said the money's appreciated.

"It was very nice to have Evergreen line mentioned in the budget," she said. "I think it's an important issue for us."

NDP Leader Jack Layton, meanwhile, was swift to denounce the transit money as insufficient.

"If they elected more New Democrats, we would have money for transit, a heck of a lot more than the pittance we're seeing here," he told CBC News.