Support for Municipalities

Backgrounder

Public health measures needed to contain COVID-19 have greatly impacted municipalities’ revenues and their ability to fund their operations.

On March 25, 2021, the federal government proposed a one-time investment of $2.2 billion that would help address infrastructure priorities in municipalities and First Nations communities. The funds would flow through the federal Gas Tax Fund, a long-term, indexed source of funding for over 3,600 communities across the country. In recent years, it has supported thousands of infrastructure projects annually.

This would double the federal government’s regular funding for municipalities in 2020-21 and it would provide much needed funding for communities of all sizes to help reduce the risk of infrastructure projects being delayed or cancelled.

The federal Gas Tax Fund includes 18 different project categories, including transit, water and wastewater, sport infrastructure, and roads. Communities can use the 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.

By using the federal Gas Tax Fund to provide the $2.2 billion one-time investment, communities will quickly be able to access the funding for priority infrastructure projects.

The government also proposed to rename the federal Gas Tax Fund as the Canada Community-Building Fund to better reflect the program’s evolution over time to a flexible and permanent source of federal infrastructure funding to support community infrastructure projects. The current name is also outdated, as there is no longer any direct link between the federal Gas Tax Fund and the gasoline excise tax.

For more information on how the allocations are broken down by province and territory, please visit the Federal Gas Tax Fund Allocation Table.

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