Feds fast-tracking $2.2B in infrastructure funds for cities

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 Prime Minister Justin Trudeau has announced that the federal government will be offering cities an advanced transfer of $2.2 billion in infrastructure money to help cover COVID-19-prompted budget shortfalls, as the start of a new month marks the beginning of more regional re-openings.

The 2020-21 funding will be sent through the federal Gas Tax Fund, and will be made in a single payment this month — rather than being spread across two annual payments as typically happens — to help municipalities rebound from the pandemic as quickly as possible, according to a Government of Canada announcement posted online in advance of Trudeau’s address.

The Gas Tax Fund provides more than $2 billion a year to 3,600 communities across Canada, with the amounts each city receives varying. The funds flow from the federal government through the provinces and territories to the local level for infrastructure projects.

The money can then be directed however the city decides, to projects under 18 different categories including: public transit; wastewater infrastructure, local roads and bridges, disaster mitigation, broadband and connectivity, culture, tourism, and recreation. 

This comes after the Federation of Canadian Municipalities said in April that cities were facing serious financial pressures, and were asking for up to $15 billion in assistance. Cities have said that with transit ridership and parking fares down considerably and new costs arising to address the pandemic, such as setting up testing clinics and funding essential services, they’re looking at layoffs or tax increases to help make ends meet. 

Trudeau said that Infrastructure Minister Catherine McKenna has sent letters to all her provincial and territorial counterparts about how the accelerated process will work.

During a later press conference, McKenna said the funding can be banked for later use, pooled with other communities for shared infrastructure projects, or used to help finance big-ticket and revenue-boosting projects. 

Many cities have seen their revenues dry up at the same time the cost of responding to the ongoing pandemic continues to mount, and while this federal financial aid cannot be used to cover direct costs, the federal government is anticipating cities can move money earmarked for their infrastructure projects to help cover COVID-19-related costs.

Noting the “cash crunch,” Trudeau said it is “crucial” that cities be able to have the resources they need to continue to respond to the pandemic and to evolve that response as communities pivot from crisis-mode to adapting to a new reality.

DANGER OF SERVICES ENDING AMID REOPENING

The prime minister noted that Monday’s announcement is “a start,” but said more will be coming to help businesses and communities safely reopen, to ensure the essentials services and supports that communities provide will remain intact.

“We know how important our cities and towns are to the success of Canadians, to success of our country's economy. That's why we are working with the provinces on figuring out ways that municipalities can be helped,” Trudeau told reporters. 

“We respect the Constitution that says that it is [up] to provinces, to manage and fund municipalities, but at the same time we've looked for ways where we can make direct contributions,” he continued, adding that he is concerned about a range of services being “in danger of disappearing” if cities no longer can afford to fund them adequately, citing daycare as one example. 

He also said that while the pace of economic restarts varies, there is more that needs to be done to ensure businesses can reopen safely.

“To keep Canadians safe, to give businesses the confidence to reopen their doors, and people the confidence to walk through those doors, we need to co-operate,” Trudeau said, restating the need for more testing and tracing as key. 

'WE NEED A LOT MORE HELP': TORY 

Reacting to the announcement, critics are raising concern that the money coming won’t significantly help municipalities stay out of the red, including Toronto Mayor John Tory.

In Toronto’s case, the city is estimating a $1.5 billion loss in revenue by the end of the year due to the novel coronavirus.

“We need to have new money to make up for the fact that we lost a lot of money we didn’t expect to lose,” Tory told CP24 on Monday morning. “I’m not trying to diminish what they are doing today, which will help a bit. But we need a lot more help. They know that. It is crucial to the proper economic recovery of this country that cities should be healthy and not in a situation of financial instability.”

Following Trudeau’s announcement, Ottawa Mayor Jim Watson said it was a “positive first step,” but the drop in his city’s revenue has been “dramatic.”

“The City of Ottawa is facing losses of $1M a day, and the provincial and federal governments need to step up with additional financial assistance. Residents are counting on us to provide essential municipal services. Let’s work together in our recovery efforts,” he tweeted. 

Federal opposition leaders also reacted in advance of the full announcement saying, echoing that the $2.2 billion will not be enough to address cities’ needs.

NDP Leader Jagmeet Singh said that, while the funding is a positive step, his party wants to see direct funding to cover operating costs.

“What cities have made very clear is that they are facing a massive shortfall in funding, which will mean losing employees and losing the ability to deliver services,” Singh said.

Outgoing Conservative Leader Andrew Scheer said he’ll wait to see what the government has planned, but stated that, to-date, the Liberals have had a “terrible record” with getting infrastructure spending out the door.

- With files from CTV -