Fast tracking gas tax money to municipalities a good first step, but more funding needed, local leaders say

Local municipal leaders say a federal government announcement that it will fast-track this year's $2.2 billion in gas tax funding is welcome news.

But the leaders also say more needs to be done to help municipalities recover financially from the COVID-19 pandemic.

The federal gas tax fund is a permanent source of annual funding to provinces and territories which, in turn, flow the funding to municipalities to support local infrastructure priorities. 

Typically delivered in two payments, one in June and one in September, the federal government announced that both payments would occur together in the coming weeks

Kitchener Mayor Berry Vrbanovic called the announcement an "immediate first step" and said the move by the federal government is important to improve the city's cash flow in a time of decreased revenues and increased expenses.

"This funding, and the acknowledgement by Prime Minister [Justin] Trudeau that more needs to be done, will open the door to further discussions with the province and federal government on how we can continue delivering the essential services that Kitchener residents rely on every day," he said in a news release.

"With the door now open, I urge Premier [Doug] Ford and Prime Minister Trudeau to quickly work with the other premiers to identify new dollars, which will keep key services running and ensure that cities are well positioned to help facilitate Canada's economic recovery."

Money will help in short term

Regional chair Karen Redman said councillors are pleased with the announcement, which she said will help municipalities where revenues have plummeted because of the COVID-19 pandemic. 

"The region's revenue shortfalls are totalling approximately $4.8 million per month during this pandemic," Redman said.

"The early release of the money will help in the short term and we're encouraged to hear that there are plans for more. We're committed to keep essential services running when people need them the most."

Redman said, "while the $2.2 billion will help Canadian municipalities provide essential services we continue to support the Federation of Canadian Municipalities appeal for at least $10 billion in emergency funding. 

Guelph Mayor Cam Guthrie says while cash-strapped local governments are happy for the funding, it won't help in addressing immediate needs.

"It is 'Thank you, but...' There's a but that comes after the thank you," Guthrie told CBC News. "The 'but' really needs to still be addressed. But how is this going to help us with operating costs now? But how is this going to help us with expenses and revenue issues that are directly related to COVID-19 responses?"

Cities having liquidity issues

Guthrie, who also chairs the Large Urban Mayors Caucus of Ontario, said the gas tax money has already been earmarked for services or projects.

He said while the thinking from the federal government was perhaps to help cities that are having liquidity issues — and there may be some flexibility for municipalities to use these funds — the money was already in municipal budgets for projects slated for this year or next.

"We have to have immediate needs for the loss of revenues of transit across all of the large municipalities or regions that have transit services," Guthrie said.

"If municipalities are now forced to use the gas tax funding that's being forwarded to us earlier to help offset the expenses and revenues for services that we've been responding to through COVID-19, that just means the earmarked projects and services that that money was originally going to go to have to still be funded, but now they're going to have to be funded in a different way," Guthrie added.

Meanwhile, CUPE (the Canadian Union of Public Employees) said while the announcement is good news for cash-strapped local governments, the funding can't be used for operating costs which are in a critical state.

The announcemnt "is welcome news but it doesn't come close to meeting the scale of the crisis facing municipalities or our members who provide those front-line services in communities across Canada," said CUPE national secretary-treasurer Charles Fleury.

CUPE noted the Federation of Canadian Municipalities has asked for $10 billion to help local governments cover their short-term operating costs, as revenues from property taxes and other fees plummet due to the COVID-19 pandemic.

"For months, CUPE and our partners in local government have been sounding the alarm on the funding crisis that is wiping out jobs and services in municipalities across the country," CUPE national president Mark Hancock said in a news release. 

"Tens of thousands of people have lost their jobs and Canadians have lost access to vital services during a pandemic."