Cities get cash, municipalities have to wait
Canadian Press
March 24, 2004 6:08 AM ET
OTTAWA — Canada's cash-starved cities will get an early taste of the federal government's much-vaunted New Deal for municipalities but will be left hungering at least another year for the massive funding boost they've been promised as the deal's main course.
Tuesday's budget took initial steps toward fulfilling Prime Minister Paul Martin's promised New Deal, mainly by reannouncing recent promises like a GST exemption for municipalities worth at least $580 million annually.
Finance Minister Ralph Goodale said the tax break -- retroactive to last month -- will save $7 billion over 10 years and provide immediate benefits to municipal governments and local public agencies.
"This is real money for improved roads, better transit, clean water and expanded local services," Goodale said in his budget speech.
But the announcements fall short of Martin's headline-grabbing pledge to overhaul the way cities draw their funding.
During his Liberal leadership campaign, Martin thundered that skimpy traditional revenue streams like property taxes would no longer suffice for cities struggling to replenish their crumbling infrastructure.
But the budget makes only passing reference to Martin's most noteworthy promise: that municipalities could receive a slice of the government's $4.5 billion annual gasoline tax.
That pledge enthralled local officials but angered critics like provincial governments who complained the cash transfer could be complicated and impose on their constitutional jurisdiction over municipalities.
Martin has since said the gas-tax transfer was only one possible funding option. Tuesday's budget document said Ottawa will launch discussions on the matter with provincial and territorial governments over the coming months.
"This government remains committed to working with the provinces to share with municipalities a portion of gas-tax revenues or to determine other fiscal mechanisms which achieve the same goals," Goodale said.
In the meantime, cities and towns will have to make do with the measures announced in Tuesday's budget.
Martin had already promised cities a total GST rebate to replace their previous 57-per-cent exemption from the loathed federal tax. The increased rebate would, for example, save a city $6,000 in the purchase of $200,000 in snow-removal equipment.
The government also confirmed Tuesday it would accelerate spending from the $1 billion Municipal Rural Infrastructure Fund and transfer its contents over five years instead of the anticipated 10-year period.
The budget reaffirmed Ottawa's pledge of a $3.5 billion cleanup of polluted federal sites like the Harvey Barracks in Calgary, the Giant Mine in Yellowknife and the Valcartier military base near Quebec City. About 60 per cent of the fund will be spent in the North.
"(This is) the largest single environmental investment ever made by this -- or any -- government and one which will quite literally change the face of many communities," Goodale said. Ottawa estimates the number of contaminated federal sites at 3,800.
Goodale also said a three-year fund for urban aboriginals would be doubled to $50 million, but spread over a four-year period.
Also, the budget promised to make local non-profit organizations eligible for the same benefits currently offered to small business, including $162 million over five years for loans and grants.
Urban areas will also be the main winners of a program allotting $15 million to help immigrants with language training and help them integrate more quickly into the labour market.