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Fuel tax squabble
Nov 25, 2005

It’s possible that an election will be called on Monday, and if that’s the case, what happens to the new five-year $167.5-million federal gas tax agreement for Manitoba?

Federal Infrastructure Minister John Godfrey, just after the agreement was signed, warned that the Manitoba deal could be sidetracked by a federal general election.

Winnipeg Mayor Sam Katz has already battled the Association of Manitoba Municipalities to speed up the signing of the agreement to stave off the possible ramifications of a Liberal defeat.

“We’ve been at this for months,” said Katz in October, “... I don’t know why the AAM wants to hold this up at the 11th hour. I have my pen right here. Let’s get it done.”

He got it done, but is it too late to reap the benefits of fuel tax dollars flowing into the city’s coffers?

Heaven knows the city, which will receive a share of $102 million over the five years of the agreement, and the province could use the money. Chris Lorenc, of the Manitoba Heavy Construction Association, said $8 billion is needed in Manitoba for repairs and upgrades to infrastructure. City engineers indicated that $210 million is needed to build and repave local streets.

Under the agreement, the city will get $12 million this year and $12 million in 2006 for a total of $24 million for the summer construction season. The terms of the agreement call for an investment in environmentally-sustainable municipal infrastructure. Eligible projects include public transit, community energy systems, wastewater management and, in communities under 500,000 people, roads and bridges, although Winnipeg is apparently also able to use funds for bridge and road improvements.

The AAM held up the signing because it wanted to have the revenues divided based upon a per capita formula. Winnipeg, Brandon, Flin Flon and Thompson  — which have public transit — wanted the division to be 90-per-cent per capita and 10 per cent based on transit ridership.

Brandon Mayor Dave Burgess was equally irked that the process had slowed down as the AAM dithered. “It only makes sense that a small portion of the money be allocated to the transit riders of this province.”

“Winnipeg is not the only city with transit operations, and the AAM should be aware of that,” added Thompson Mayor Bill Comaskey. “Sharing a portion of the funds based on transit ridership is not something that will benefit Winnipeg alone, but will help communities in every region of Manitoba.”

What turned the tide is that the province agreed to kick in an additional $1.4 million for transit improvements. The province stepped in as the squabble escalated, believing the opportunity could not be lost. What position they held when the squabble first arose is anybody’s guess, but it took them a long time to react.

The $167.3 million breakdown is: $154.59 million divided among all municipalities on a per capita basis; $12.71 for public transit; and this is further divided up to: $101.3 million for Winnipeg ($11.6 million for transit included in this sum); $6.49 million for Brandon ($744,022 for its transit); $2.17 million for Thompson ($248,331 for transit); $981,376 for Flin Flon ($112,401 for transit); and $54.4 million to be shared by the other Manitoba municipalities.

“I am pleased the government of Canada recognizes the importance of stable, long-term funding to help Manitoba municipalities meet their evolving infrastructure needs,” said Ron Bell, president of the AAM in a press release for the signing ceremony on November 18 — a ceremony he didn’t even attend. 

It is actually only an agreement signed between the provincial and federal governments, though Katz was there. It’s up to the provincial government to hand out Ottawa’s money, because that’s how our government system works. Cities and municipalities are not constitutionally recognized — they are creatures of the provinces in which they are located.

Despite the agreement, the media is now reporting that mayors Katz and Comaskey have indicated their frustration has returned and they would not be adverse to letting their membership in the AAM lapse.

In any case, the actual signing of the agreement may be all academic, following Monday’s confidence vote in the House of Commons — a money bill which includes funds for federal gas tax agreements.

Because of the AAM dithering, it does raise the question of what value the organization holds for urban centres that represent the vast majority of people in the province. Winnipeg alone, coupled with the immediately surrounding municipalities, has some 67 per cent of the province’s population.

Yet, the AAM could be saved even if the election goes against the Liberals. Conservative Party Leader Steven Harper has said he will honour the fuel tax revenue sharing agreements. It’s probably a temporary reprieve, regardless of the election result, since rural and urban interests are often pitted against each other. 

While Canada has become the most urban country in the world, conflicts still arise because the provincial government structure is an anachronism of a long-gone era when rural people were in the majority. Their resulting power to dictate government policy has not waned even as rural  residents migrate to cities in greater and greater numbers.