Early gas tax payout won’t help for long, mayor says

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This article was published 31/05/2020 (1424 days ago), so information in it may no longer be current.

Mayor Brian Bowman says Winnipeg’s share of an early federal gas tax payout will help the city get through the summer but isn’t enough to guarantee council can avoid service cuts or steeper property tax hikes in the longer term.

Ottawa announced Monday it will expedite a $2.2-billion payment of previously committed federal gas tax dollars to municipalities to support their infrastructure as they cope with COVID-19 shortfalls. That means the full payments will arrive this month, instead of a portion coming through later this year.

Winnipeg expects to receive about $44 million, which Bowman said is a positive step that will help support city services over the next few months.

But if pandemic restrictions continue to linger on without more senior government support, the need to maintain critical services could force some tough choices, he said.

“The longer it goes on, the more pressure it places on us to make choices between programs and services and taxation levels,” he said.

City finance officials recently estimated Winnipeg will lose $73 million this year due to the pandemic, before savings from reduced Transit service and city layoffs are factored in. The losses would increase if any pandemic-related restrictions continued past Aug. 31.

The mayor said Winnipeg needs additional provincial and federal support, especially since it can’t run an operating deficit.

He said a growth funding model could improve the financial outlook, since it could help the city tap into revenues that grow as the economy does.

For example, the mayor suggested Manitoba could consider devoting the revenue from one point of its provincial sales tax to support municipal operating costs.

Bowman said he wishes to avoid a property tax hike, since he expects it would hinder Winnipeg’s economic recovery.

“(With) property taxes and business taxes… any prospect of increases is only going to hurt property owners and businesses at a time when they need as much help as possible,” said Bowman.

On Monday, Prime Minister Justin Trudeau called the funding “an initial measure” and urged provincial governments to help support cities.

“We need to do more and we will do more. But doing more needs to happen hand-in-hand with the provinces who have jurisdiction over municipalities,” said Trudeau.

NDP Leader Wab Kinew said the provincial government must act quickly to help cities, through financial aid packages and by allowing local governments to run operating deficits for this year only.

“The province could step in and give the City of Winnipeg the ability to borrow money for one year just to help them through this difficult period,” said Kinew.

In an emailed statement, Manitoba Municipal Relations Minister Rochelle Squires noted the province has advanced the city $90.9 million of its municipal operating grant to help address pandemic costs.

“We are providing certainty to municipalities to help maintain critical essential services such as emergency personnel, even as we face unprecedented financial challenges as a provincial government,” said Squires.

The minister did not directly answer whether the province will provide additional funding for Winnipeg but said her government “looks forward” to more collaboration with municipalities and the federal government.

-with files from The Canadian Press

Joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga