11/20/2009

The Federal Gas Tax Fund will continue through 2010-2014 without any substantial changes to the program.
Issue: 

Following the completion of a joint Government of Canada-AMO evaluation, which reported positive results for all partners, the Federal Gas Tax Fund will continue through 2010-2014 without any substantial changes to the program. The per capita funding amount communicated by AMO in December 2008, however, has changed slightly. The original estimate of $61.52 per capita per year will actually be $61.35. This difference will be offset to some degree by a one-time interest payment of at least $0.21 per capita that will be distributed through AMO.  

Background:

The Gas Tax Fund extension, signed in September of 2008, provides Ontario municipalities with $746 million annually from 2010-2014. A joint evaluation of the first phase of the program (2005-2009) was completed in 2009 to assess the success of the program and determine if any changes would be required to strengthen it.  

The evaluation demonstrated a high level of satisfaction from all partners to the Agreement, emphasizing the effectiveness of the Gas Tax funding model. Importantly, the evaluation reported that for most municipalities, projects supported by this fund would either not have been undertaken, or would have been greatly scaled back, in the absence of this funding. The Canada-AMO joint evaluation can be accessed by clicking here. Also completed was a National Summative Evaluation, which assessed the success of the Gas Tax Fund across the country. The National Summative Evaluation can be accessed by clicking here.

The Federal Gas Tax funding for the extension period from 2010-2014 is allocated on a per capita basis using the 2006 Statistics Canada census, to ensure that all Ontario communities benefit from it equitably. However, inaccurate data was used to calculate allocations that were announced to Ontario’s municipalities in December 2008.

While the total commitment of more than $2.9 billion over a four year period is not affected by the revised data, the allocations to individual municipalities may be. The original estimate of $61.52 per capita will actually be $61.35.  In the coming days municipalities will receive notification of their revised allocation. All partners to the Agreement have confirmed the revised figures and apologize for any inconvenience this may cause.  

The difference for most municipalities will be offset to some degree by a one-time interest payment by AMO in January 2010. As promised in 2005, AMO will pass on all the interest accrued on the funding to Ontario municipalities, with the exception of the City of Toronto, on a per-capita basis. This is estimated to flow a minimum of $1.9 million, or $0.21 per capita, to municipal governments for eligible federal gas tax projects. In addition, AMO is actively working to streamline costs associated with the administration of the Federal Gas Tax Fund in an effort to pass on further savings to municipalities. 

Action:

With the evaluations now complete, AMO is prepared to rollout the program extension. Municipalities should expect to receive an amendment to the Municipal Funding Agreement early in 2010 which will require a municipal by-law, official signatures and the official municipal corporate seal.

Municipal Treasurers will be receiving confirmation of the revised allocation amount.