07/01/2011

Benefits of the Federal Gas Tax Fund, an AMO Backgrounder for the Ontario Provincial Election 2011.
Ontario’s infrastructure is under mounting pressure.  Much of it was first built in the 1950s and 1960s and is now deteriorating, requiring modern upgrades or replacement.  A growing population is also increasing the burden on existing infrastructure and fueling the demand for new investments.  Ontario faces a municipal infrastructure gap of $60 billion that will take 10 years to close, leaving municipalities with a bill of $6 billion each year.

The Federal Gas Tax Fund (GTF) is the only source of stable and long-term federal funding to help address this gap. It transfers $746 million annually to Ontario municipalities and allows investment in seven categories of environmentally sustainable infrastructure. Funds are distributed twice annually to all municipalities on a per capita basis and its flexibility allows investment in multi-year priority projects without having to submit an application. In fact, the agreement in Ontario is unique because AMO and municipalities have a direct relationship with the Federal Government.

Originally launched as a five-year program in 2005, the Gas Tax Fund was extended to 2014 and the 2008 federal budget committed to making the program permanent. This commitment was reaffirmed in the 2011 federal budget which promised to enshrine the federal Gas Tax Fund in legislation as a permanent annual source of infrastructure financing for municipalities.

In addition, the budget also committed to work with provinces, territories, the Federation of Canadian Municipalities (FCM) and other stakeholders to build a long-term plan for investing in public infrastructure. AMO has long advocated for dedicated, long-term, sustainable infrastructure funding programs from both the Federal and Provincial Governments.

The benefit of long-term funding is clearly demonstrated through the Gas Tax Fund, which has proven to deliver. This unique arrangement has allowed municipalities to invest in local priorities while meeting federal goals of cleaner air, cleaner water and reduced greenhouse gas emissions.

Since its launch in 2005, Ontario’s municipalities have invested $1.6 billion in over 3,100 projects worth almost $5 billion.