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Municipalities call on federal parties to support permanent doubling of gas tax transfer
July 23, 2019
Bill Curry

Canada’s municipalities received a surprise $2.2-billion windfall in this year’s pre-election Liberal budget in the form of a one-time doubling of the federal gas tax transfer -- and now they’re calling on federal parties to support making that boost permanent.

In an announcement to be released Tuesday, the Federation of Canadian Municipalities (FCM) will make doubling the gas tax its key request for political parties to include in their 2019 election platforms.

The FCM represents more than 2,000 municipalities and the organization has played an influential role in advising federal infrastructure policy under Justin Trudeau’s Liberal government and Stephen Harper’s Conservative government.

For a city such as Prince George, with a population of 78,675 and a municipal operating budget of about $169-million, the federal gas tax brings in more than $3-million a year -- and more than $6-million with this year’s doubling.

Prince George Councillor Garth Frizzell, who is also first vice-president of the FCM, said the extra money went to several small projects such as sidewalk repairs, park upgrades and needed maintenance of municipal buildings.

“The gas tax fund is a very effective way of getting our assets attended to," he said in an interview. “The big benefit for us is it’s direct. The funding comes to us so that we can identify local needs -- and it’s reliable.”

Even though Ottawa has increased spending for infrastructure projects, Mr. Frizzell said many federal and provincial programs are aimed at funding new infrastructure, leaving cities on the hook for maintaining a large percentage of existing public assets such as roads, bridges and buildings.

“We’ve got a significant amount of the national infrastructure. Up to 60 per cent of infrastructure is being maintained and financed by local governments, and we’ve got about 10 per cent of the tax pie,” he said.

Ann-Clara Vaillancourt, a spokeswoman for Infrastructure Minister Fran├žois-Philippe Champagne, declined to say whether the Liberal Party would support the request.

"The FCM has been a valued partner in delivering our infrastructure plan and we will consider their proposals carefully,” she said in an e-mail.

Conservative MP and infrastructure critic Matt Jeneroux said the party is considering the gas tax transfer as a key part of its infrastructure platform.

“We’re looking at obviously the gas tax fund being a crucial aspect of building infrastructure,” he said Monday. “In terms of doubling it, there’s no platform out yet that I can announce that we’re going to do that, or not do that. But it’s certainly something that we’ve heard loud and clear from FCM over the last few months and are certainly looking at as part of our platform.”

Mr. Jeneroux said the party will likely release its infrastructure platform later this summer, but the precise timing has not been decided.

NDP Leader Jagmeet Singh has released a high-level policy document that makes several references to supporting infrastructure spending, but the document does not mention the gas tax and does not include a line-by-line costing of its promises.

NDP spokeswoman Nina Amrov provided a written comment Monday that did not directly address the FCM’s request, but said the party supports more long-term funding.

“A one-time boost isn’t going to get our communities the modernized transit, renewable energy, or technology infrastructure they need to succeed in the long run,” she said. “The federal government needs to step up as a real, long-term partner with our communities.”

The gas tax fund got its name because it was originally linked to federal excise tax revenue from fuel sales. However, the fund has evolved over the past decade to become a permanent transfer from general revenues.

Infrastructure was a centrepiece of the Liberal Party’s successful 2015 election campaign, in which the party promised to run short-term deficits in order to pay for increased infrastructure spending. In government, the deficits came in larger than promised and the party abandoned plans to balance the books by 2019.

The Liberal government did follow through with major increases to the federal government’s infrastructure budget, but the Parliamentary Budget Officer has said the 12-year plan is rolling out more slowly than originally scheduled.

To date, neither the Liberals, Conservatives or NDP have released a costed platform. The election is scheduled to take place Oct. 21 and the official campaign will likely begin in early September.