‘Generous’ funding, new deal for municipalities is good news: MHCA
The Stefanson government has signaled it will be removing the funding cap and giving ‘generous’ increases to the operating grants it transfers to Winnipeg and other Manitoba municipalities, a step regarded as necessary to assist towns and cities struggling to finance essential services.
The news, made by Municipal Affairs Minister Andrew Smith on Feb. 9, arrived a day after the release of Winnipeg’s budget, in which the city noted its six-year capital plan of $3.1 billion would spin off $190 million in revenues to the province. His comments also follow those of former minister Eileen Clarke, who late last year said she would be asking Treasury Board for a more acceptable funding model for municipalities.
Winnipeg is raising taxes this year, via the property tax and frontage levy, to deal with increased demand for services but also to help balance operating expenses in the wake of the pandemic economic hit that accounted for about half of Winnipeg’s forecasted deficit of $33.8 million. By provincial legislation, municipalities cannot run deficits and all expenditures must be balanced by the end of the year.
“We are encouraged to hear the province is removing the municipal funding freeze, which has been in place since 2016,” MHCA President and CEO Chris Lorenc said. “It has put our cities and towns in a very difficult spot given the difficulty they have raising revenues to cover all service demands.”
Lorenc noted municipalities collect just 10 cents of every tax dollar, yet carry the costs for a disproportionate amount of public infrastructure – some estimates are up to 60% of infrastructure.
While tri-governmental funding agreements will help build new infrastructure, such as regional roads or water treatment facilities, asset life-cycle costs such as financing and maintenance are fully borne by the municipalities.
That’s why Canadian municipalities need a new deal for better, more equitable sharing of tax revenues, or to give cities greater access to new sources of revenues, such as a sales tax, Lorenc said.
“The MHCA has been a long-standing supporter of a new fiscal deal for municipalities because the model that was devised at the turn of the century simply does not reflect the modern realities, the massively expanded roles of municipalities.”
Lorenc said he is also encouraged that the city and the province are talking about a better funding model. “This is good for everyone.”
