You are right; I was not entirely clear.
The point I wanted to make is that [all funds allocated to SRT conversion and extension] + [all funds allocated for Sheppard LRT] approximately equal to [cost of extending Danforth subway to Sheppard /McCowan].
No, extending the subway to Sheppard & McCowan is significantly more expensive. There is no option to transfer money from Sheppard LRT to this project; politics blocks it.
Conservative majority: Sheppard LRT is canned and funds go against the deficit/debt. No funded replacement is proposed; so there is no money to transfer. DRL might be funded (depends on whether the banks and developers will call in favours to get it). Most transportation money will go to a few highway improvements and GO extensions into new territory.
NDP majority: LRTs continue on track as proposed and DRL will almost certainly be funded. Most new transit money will go into operating subsidies rather than capital (they ran on that in the last election at least).
Liberal majority: Depends largely on the new leader but continuing what has been started is most likely. They really need results at this point and changing plans again isn't going to help them politically at all. Most of their current scandals are related to not committing to the project and being wishy-washy with them. Any new funds would be to a DRL + Yonge Extension combination and Mississauga; not Danforth.
Actual Options somewhat on the table:
1) Danforth extension: Costs $500M extra and stops at SCC. Bus service would be run between Sheppard and SCC. Sheppard LRT, if built, would not intersect the Danforth extension. I expect Toronto will need to fund the $500M gap from general revenues (property tax, land transfer tax, etc.) and fund the EA and upfront.
2) SRT converstion/upgrade option as LRT (ALRT costs more) would stop at Sheppard and would intersect with the Sheppard LRT.
It's pretty much a guarantee that all options involve an SRT closure at this point simply because of the age of the SRT components.