Feds accelerate billions in funding for cash-strapped municipalities

It falls well short of the $10B in 'new funding' the FCM asked for

The federal government is accelerating $2.2 billion in gas tax funding for municipalities hit-hard by the COVID-19 pandemic.

The funding would have otherwise been sent to municipalities six months from now. It falls significantly short of the $10-billion the Federation of Canadian Municipalities asked for, with allocations based on population and transit ridership.

Prime Minister Justin Trudeau acknowledged the shortfall during his announcement on Monday from the steps of Rideau Cottage.

“Yes, we need to do more…and we will do more, but this has to happen collaboratively with the provinces,” Trudeau said.

Municipalities are experiencing steep revenue losses during the COVID-19 pandemic. Toronto alone says it’s facing a $1.5-billion shortfall this fiscal year.

The City of Barrie projects a $65-million reduction in cash flow by the end of the year and had to send out over 500 layoff notices in April.

Barrie Mayor Jeff Lehman said today’s announcement, while good news, it’s not new money. Lehman tweeted that the City’s revenue losses and additional costs are “new, and real.”

Without new funding, Lehman wrote that cities will have tough choices to make moving forward. “We are providing essential services such as police, fire, public transit, public health. We cannot allow these services to be compromised or reduced.,” Lehman said.

The City of Barrie projects a $65 million reduction in cash flow by the end of the year

The Prime Minister says they are working with the provinces and territories to look at ways to “further support municipalities.”

“We know there are significant issues around transit revenues, and municipalities are in a cash crunch right now,” Trudeau said. “We know there’s a range of services that are in danger of disappearing,” Trudeau said.

Lehman acknowledged that, and said Mayors and Councillors across the country will keep pushing for funding.

The $2.2-billion in annual federal infrastructure funding will be delivered in one payment in June.

Minister of Infrastructure and Communities, Catherine McKenna, has already sent out letters to her counterparts to explain how the money will be distributed over the coming weeks.

“This will put $2.2 billion in the hands of communities now to fund local infrastructure projects like public transit, high-speed broadband, and recreation centres, and get Canadians to work,” McKenna said.

FCM asked for $10 billion in additional funding

Bill Karsten, President of the Federation of Canadian Municipalities, asked for the Feds to deliver at least $10- billion in emergency operating funding to all local governments.

The FCM also wanted the federal government to commit to revisit the need for additional operating funding within four months.

The FCM also asked for the feds to provide local governments with the ability to transfer unused allocations to the federal Gas Tax Fund program for capital expenditures.

The gas tax money has to be used for capital costs and not operating costs.

more to come…