Federal Government Announces $2.2 Billion in Municipal Gas Tax Funding

Today, Prime Minister Justin Trudeau announced an early transfer of $2.2 billion in federal Gas Tax funding for Canadian municipal infrastructure projects. This means that the entire 2020-2021 municipal Gas Tax Fund amount will be delivered in June 2020.

The federal Gas Tax Fund includes 18 different project categories, including capacity building, sport infrastructure, and roads. Municipalities can use funds immediately for priority projects, bank them for later use, pool the dollars with other communities for shared infrastructure projects, or use them to finance major infrastructure expenditures.

The money from the Gas Tax funding cannot be used to cover municipal operating costs and today’s announcement did not extend eligibility for other federal programs to cities and towns.

It is important to note that this is effectively only an advance of funding that was previously allocated and that no new additional monies have been directed. This announcement does little to address the growing deficits that many Cities are currently facing, including the City of Toronto’s $1.5 to $2.8 billion shortfall for 2020, which translates to a $65 million weekly financial pressure.

The City of Toronto will receive $166 million of this Gas Tax funding by June 10, 2020. Mayor John Tory said that today’s funding announcement is “a good start but does not represent the comprehensive response needed for Cities” and further noted that this is “not new money, just an advance on previously promised gas tax revenues”.

Other major Canadian cities are facing similarly ballooning deficits as a result of decreased revenues and increased spending related to the ongoing COVID-19 pandemic. For example, City of Calgary is losing $15 million weekly, the City of Mississauga is losing $20 million monthly, and Metro Vancouver is facing a shortfall of approximately $110 to $330 million this year. Additional funding support is needed and we are likely to see a reliance on P3’s as these shortfalls remain an issue and ongoing financial pressure.

The Prime Minister acknowledged that this is a first step in helping municipalities facing significant COVID-19 related cash shortfalls and that more support requires ongoing negotiations with Premiers.

Federal and Municipal Engagement

Consult the Sussex COVID-19 Guide for information on supports made available across the Federal, Provincial and Municipal Governments.

As the details of the programs announced today become available, let Sussex help connect you with the right people in government to help your organization get through these extraordinary times.