The money to fund Ford's tax cuts and to balance the budget has to come from somewhere. Transit projects are very vulnerable as they don't affect current public service jobs.
If phase 2 does not go ahead, the city of Ottawa is screwed. Phase 1 is a minimal system and does not offer a lot to commuters.
In the post Bill Davis era, Conservatives have had a reputation of screwing cities. Ottawa voters were already very leery of Doug Ford. If he reneges, expect the PCs to get even fewer votes in the next election in Ottawa.
I wouldn't say it's toast, I would just say that the City needs to find a way to remove $1B worth of projects from the scope. I would start with the extensions to areas that voted PC in the last election. That would mean the extension to Ottawa South, Moodie (stop at Bayshore), and the Baseline BRT would be scrapped. Elections have consequences (and I say this as a former resident of Ottawa West-Nepean).