Feds speed up Gas Tax Fund payments to help cover municipal infrastructure projects

The federal government plans to speed up Gas Tax Fund payments to help Canadian cities continue with much needed infrastructure projects during the COVID-19 pandemic.

Typically, the government hands out $2.2-billion worth of federal infrastructure funding in two separate payments, but on Monday, Prime Minister Justin Trudeau announced they would deliver those funds in one lump sum before the end of June.

The $2.2-billion falls well below the $10-billion the Federation of Canadian Municipalities (FCM) says cities need to cover emergency operations funding. Trudeau acknowledged those issues, but said this was just the first part of their plan to help Canadian municipalities.

“We know that this is just an initial measure that brings forward money that the cities were going to get six months from now anyway, but there is a need right now for liquidity, for support, as they deal with this COVID crisis,” Trudeau told reporters during a media update Monday morning. “Yes, we need to do more and we will do more, but doing more needs to happen hand-in-hand with the provinces, who have jurisdiction over municipalities.”

Infrastructure and Communities Minister Catherine McKenna echoed those sentiments during a press conference of her own on Monday. She called the plan an important first step to helping municipalities, but said the federal government wasn’t going to do more before consulting with the provinces.

“Municipalities—and we’ve been told this by provinces—are creatures of the provinces and so we really do need the provinces to work together,” McKenna said when asked by the federal government only sped up Gas Tax payments instead of increasing them. “We certainly understand the significant challenges that are faced by cities and towns across the country … and we’re going to continue working with the provinces. I think a solution is there to be had.”

McKenna said she’s already had several conversations with mayors and provincial infrastructure ministers, and she expects to have more in the coming days.

The FCM thanked the federal government for offering some help, but said the aid falls far short of what Canadian cities need to stay afloat. The organization, which represents more than 2,000 Canadian municipalities, issued a brief statement on Monday calling the plan a “modest, preliminary measure” which would help some communities with immediate needs. However, it also said the plan does not offer any new money, and does not address the non-recoverable losses in municipal budgets.

“Municipalities still face $10-15 billion in non-recoverable losses. That’s why we have appealed for emergency operating funding—to keep frontline services going strong and to be ready to drive Canada’s recovery,” the statement reads. “There will be no economic recovery without a solution to the municipal financial crisis. We need all governments working together on this, and that needs to happen now. We are out of time.”

Prince Albert Mayor Greg Dionne said he appreciated the federal government’s gesture, but it’s not enough to help in the long-term. Dionne said the policy amounts to an advance from the feds, and while it will help with immediate problems, it won’t do much to help the city get back on its feet.

“All were asking of the federal government is to double the Gas Tax (payments) like they did last year,” Dionne said on Monday. “That would get us through the clinch easy, and the program’s there. It’s easy to hand out. It’s already there. You don’t have to come up with something new.”