Skip to main content

The Calgary skyline is seen in a July 6, 2018, file photo. The federal government said it will move up its gas-tax payment transfers to Canadian municipalities as an interim measure to help cities hit by the COVID-19 pandemic.Paul Brady/iStockPhoto / Getty Images

Canadian municipal leaders largely dismissed a federal plan to speed up delivery of $2.2-billion in already-budgeted gas tax transfers Monday, insisting cities need billions of dollars more in emergency funding to survive a financial crisis caused by the novel coronavirus pandemic.

Prime Minister Justin Trudeau announced Monday morning that Ottawa will give municipalities this year’s full payment in gas tax transfers in the coming weeks, rather than the usual practice of spreading the transfers over two instalments.

Mr. Trudeau said cities are a provincial responsibility and called on premiers to “step up," exposing what Vancouver Mayor Kennedy Stewart described as a behind-the-scenes “showdown” between Ottawa and the premiers over how to split the bill for municipal budget shortfalls.

Large municipalities with heavily used transit systems have been hit harder than smaller towns, as ridership, and millions in revenues, evaporated in the pandemic.

“This is a start. We know there’s more to be done to support municipalities,” Mr. Trudeau said.

The federal gas tax fund is a transfer payment from Ottawa. Unlike transfers for specific projects, municipalities have more flexibility to decide how the funds will be used. Ottawa can increase the amount unilaterally. In 2019, a federal election year, it approved a one-time doubling of the transfer to $4.4-billion.

The Federation of Canadian Municipalities (FCM) declared more than a month ago that cities need at least $10-billion from the federal government to maintain existing services. The FCM said Monday it was encouraged by the Prime Minister’s pledge to do more, but described the gas tax announcement as a “modest, preliminary measure” that may help some municipalities.

“To be clear: this is not new money,” the organization said in a statement. Amalgamated Transit Union Canada president John Di Nino said in a statement that the federal government “has failed to take ownership of the funding crisis faced by public transit agencies across the country.”

Ontario Premier Doug Ford said his province is willing to provide some of the needed cash for municipalities – but that the federal government has to commit funding as well.

“It’s existing money,” Mr. Ford said of Monday’s pledge, of which Ontario expects its municipalities’ share to be more than $800-million. “That money’s already in the budgets of these municipalities. So it’s not new money. We need new money.”

Responding to Mr. Trudeau’s comments that municipalities were a provincial responsibility, Mr. Ford said the two levels of government need to work together and noted there are many areas where Ottawa and the provinces could argue over jurisdiction.

“Hey, we’re in this together. And if we’re in this together, we need the support," he said.

Vancouver faces a $136-million budget shortfall and temporarily laid off 1,500 municipal workers in April.

In an interview, Mr. Stewart expressed hope that Monday’s announcement will move Ottawa and the provinces toward a deal for cities.

“There is a showdown between the federal and provincial governments about help for municipalities. This is the first very teensy sign from the feds that they’re willing to move,” said the Vancouver mayor. “They’ve shown one of their cards so now it’s up to the provinces. In other provinces, cities are in really bad shape because of transit. Toronto is really suffering.”

Jonathan Cote, the head of the mayors’ council for Vancouver’s regional transit system, which is allocated most of the gas-tax money in the region, said the announcement does nothing to address the huge deficits of the beleaguered TransLink, the Vancouver area’s public transportation network. He said the gas-tax money has already been allocated for bus purchases to expand or replace the existing fleet.

Edmonton Mayor Don Iveson also said he appreciated the signal of more to come, but that Monday’s announcement won’t help with the city’s budget crunch.

“It’s not quite the news we were waiting for," he told reporters.

Toronto Mayor John Tory said talks between Ottawa and the provinces on a “substantial” package for cities were delayed both by discussions over how to distribute the money to different municipalities and what he called “constitutional fencing.” Under the division of powers that dates back the British North America Act of 1867, provinces have sole jurisdiction over municipalities.

“I am frustrated by the fact that there’s a bit of this to-ing and fro-ing going on because of the nature of the Constitution,” Mr. Tory told reporters. “But at the same time I sense that they are working hard to get a solution for us.”

Like other mayors, Mr. Tory called Monday’s announcement a good start, but nowhere near the support cities need. Toronto expects to receive $166-million of the cash advanced on Monday, which is money it had already earmarked for infrastructure projects representing a tiny fraction of the hole created by COVID-19.

Mr. Tory says more money needs to flow soon, as Toronto faces at least a $1.5-billion shortfall owing to COVID-19 that he warns could mean large tax hikes and deep cuts to services, including shuttering the city’s Sheppard subway and Scarborough RT lines.

Alberta Premier Jason Kenney said municipalities are facing “a huge fiscal challenge” and that his province will soon have an announcement to increase its own transfers to local governments to pay for large capital projects.

The Prime Minister said that he is “very concerned” about the funding levels for cities, which are responsible for essential programs such as police and fire departments and community health.

“There’s a range of services offered by cities that are at danger of disappearing,” he said. “Cities are the responsibility of the provinces. The federal government will be there to work with the provinces to support, to help flow money, but the provinces need to step up as well and that’s what we’re discussing right now.”

With a report from James Keller

Know what is happening in the halls of power with the day’s top political headlines and commentary as selected by Globe editors (subscribers only). Sign up today.