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Ottawa to fast-track $2.2 billion for cash-strapped municipalities due to COVID-19

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Cities struggling to make ends meet during the COVID-19 pandemic are getting a cash advance from the federal government.

Prime Minister Justin Trudeau says they will get $2.2 billion through their share of the Gas Tax Fund in the coming weeks, instead of having to wait.

“Normally municipalities receive these payments in two instalments, but we know that cities and towns need this money right away as they deal with COVID-19,” said Trudeau during his daily briefing.

With things like transit at a near halt and property tax payments being missed, municipalities have been struggling with drying up revenue. They can’t run deficits like their provincial and federal counterparts, so they need to come up with a way to get money to keep their cities running.

Catherine McKenna, Minister of Infrastructure and Communities, says payments are being sped up so cities and towns have the resources they need for infrastructure projects.

“This ongoing funding can be used immediately by municipalities for priority projects, it can be banked for later use, pooled with other communities for shared infrastructure projects, or used to help finance big ticket projects that can pay communities dividends for decades to come.” McKenna said during a news conference.

The Federation of Canadian Municipalities called the funding a modest preliminary step but says more help is needed.

“The Prime Minister today confirmed his readiness to engage with municipalities on solutions. We are encouraged by his commitment to come forward with additional federal support—and we urge provincial governments to do the same,” said the Federation of Canadian Municipalities, in a statement.

“Municipalities are on the front lines of this pandemic—and we still face $10-15 billion in non-recoverable losses. That’s why we have appealed for emergency operating funding—to keep frontline services going strong, and to be ready to drive Canada’s recovery.”

Trudeau says he recognizes today’s announcement is just a starting point.

“We know there’s more to be done to support municipalities, and to support the entire reopening process,” he said.

“In the days and weeks to come, we’ll keep working with the provinces and territories on this, and on a whole range of other measures.”

Ontario Premier Doug Ford was asked about the funding during his daily COVID-19 update. He pointed out that his province sends $13 billion tax-payer dollars to the federal government.

“I appreciate them advancing the payment, but it’s already in the budget and we need more money,” said Ford.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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