Federal government pledges $2.2B for municipalities
The federal government has announced that it will fast track $2.2 billion worth of funding to help municipalities recover from the economic impacts of the COVID-19 pandemic.
The money will be delivered through the Gas Tax Fund, and will be provided as a one-time payment rather than in two instalments, which is usually the case.
The Gas Tax Fund provides more than $2 billion annually to 3,600 communities across the country, and the amounts provided to each vary. The money is provided to the provinces and territories, which in turn flow the funding to their respective municipalities to support local infrastructure priorities. Municipalities can pool, bank and borrow against the funding.
In recent years, gas tax funding has supported approximately 4,000 projects a year. Communities select how best to direct the funds, and can use the funds to make strategic investments across 18 project categories, including public transit, road and bridges, wastewater infrastructure and highways.
“This is a start. We know there’s more to be done to support municipalities, and to support the entire reopening process,” Prime Minister Justin Trudeau told reporters following the announcement on June 1.
The Federation of Canadian Municipalities has said that local governments are being rocked economically by the COVID-19 pandemic. It estimates that local governments are facing a short-term financial gap of between $10 billion and $15 billion. They have lost critical revenues from such services as transit fares, user fees and deferred property taxes. Some have even warned that they may have to cut services and raise taxes to balance their books.
Ontario’s share of the Gas Tax Fund for 2020–21 is $816 million, and the money will be shared among 641 communities.
Big city mayors in Ontario said the funding welcome, but only a start. Toronto Mayor John Tory said his city is forecasting a loss in revenue of $1.5 billion by year’s end. He told CP24 the funding, “will help a bit. But we need a lot more help. It is crucial to the proper economic recovery of this country that cities should be healthy and not in a situation of financial instability.”
Ottawa Mayor Jim Watson called the funding, “a positive first step”, adding that the city is losing $1 million daily.
“The provincial and federal governments need to step up with additional financial assistance,” he Tweeted. “Residents are counting on us to provide essential municipal services. Let’s work together in our recovery efforts.”