Federal government to fast-track $2.2B to help municipalities hit hard by pandemic

Trudeau says today's announcement is the first step toward helping struggling cities, towns

CBC.ca
June 1, 2020

The federal government is accelerating the delivery of infrastructure cash to help struggling municipalities taking a financial hit from COVID-19 --but mayors say they need much more to avoid mass layoffs, property tax hikes and service cuts.

Prime Minister Justin Trudeau said the $2.2 billion in annual infrastructure funding for communities, paid out of the gas tax fund, will be delivered in one payment in June. That gives municipalities earlier access to previously allotted money.

"This is a start," he said.

Trudeau said the federal government will work with the provinces, which have jurisdiction over municipalities, to provide more emergency aid.

"The fact is we need to do more, and we will do more," he said.

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Communities will have the flexibility to use the funds for capital projects that meet local needs, such as expansion of high-speed internet networks, improvements to water and road systems and construction of new bike and walking paths.

But mayors say their cash-strapped cities need operating funds immediately to offset revenue losses from falling transit and service fees.

Vancouver Mayor Kennedy Stewart said his city already has had to lay off 1,800 people and is projecting losses of $300 million this year.

'Welcome first step'
He called today's announcement a "welcome first step," but warned that cities need operational funds to get the capital projects off the ground.

"The whole national economy runs through cities," he said in an interview with the CBC's Rosemary Barton. "If we don't have the staff to approve permits, to do building inspections, to get the engineers and the construction teams going, then the whole economy creeps to a stall."

Winnipeg Mayor Brian Bowman said cities can't run deficits because they are restrained by balanced budget legislation. He said officials face "fundamental choices" between raising taxes and cutting services.

"These other two levels of governments need to coordinate in a way that is unprecedented and rises to the occasion and the need right now in a pandemic," he told Barton.

Watch: Infrastructure Minister Catherine McKenna says funding is a 'first step'

The Federation of Canadian Municipalities (FCM) has said local governments are facing a short-term financial gap of $10-15 billion because of a sharp decline in transit fares and user fees and deferred property taxes.

The FCM has pressed the government for $10 billion in emergency operating funding, with allocations to be based on population and transit ridership.

FCM president Bill Karsten said said the "modest, preliminary step" announced today doesn't doesn't address the stark choices municipalities face, but he is encouraged by Trudeau's promise to come forward with more supports.

"Municipalities still need at least $10 billion in emergency operating funding to keep frontline services going strong, and to be ready to drive Canada's recovery," he said.

The NDP's critic for infrastructure and communities Taylor Bachrach said the government must do more to help municipalities avoid deep cuts to the services on which Canadians rely.

"It's good to hear the government finally acknowledge it has a responsibility to support municipalities through this crisis but today's announcement has been slow to arrive ... too slow for the thousands of municipal workers already laid off," he said in an email.

"Not only is the amount insufficient to address the financial crisis Canada's cities face, today's announcement is simply an advance on funds municipalities are already scheduled to receive for capital projects. What municipalities need most, and have been calling for, is help with operating shortfalls."

Cities also are facing revenue shortfalls related to tourism. Ottawa, for example, could lose out on about $1.4 billion due to the cancellation of festivals, meetings and other events.

On Sunday, the government announced millions of dollars in new funding to promote domestic travel and tourism.