HomeMy WebLinkAboutFCS-14-101 - Federal Gas Tax Agreement Staff Report
I r .R finance and Corporate Services Department wmkitchener.ca
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: June 9, 2014
SUBMITTED BY: Ryan Hagey, Director of Financial Planning
519-741-2200 x 7353
PREPARED BY: Ryan Hagey, Director of Financial Planning
519-741-2200 x 7353
WARD(S) INVOLVED: All
DATE OF REPORT: May 23, 2014
REPORT NO.: FCS-14-101
SUBJECT: Federal Gas Tax Agreement
RECOMMENDATION:
That the Mayor and Clerk be authorized to execute the Municipal Funding Agreement,
subject to the satisfaction of the City Solicitor, for the Transfer of Federal Gas Tax Funds,
as outlined in Finance and Corporate Services Department report FCS-14-101; and
further,
That the City Treasurer be delegated the authority to administer the provisions of the
Municipal Funding Agreement.
BACKGROUND:
The federal Gas Tax Fund (GTF) is the only permanent, stable and predictable source of
funding for municipal infrastructure. Canada, Ontario, the Association of Municipalities of
Ontario (AMO) and Toronto extended the GTF to 2023 by signing the Administrative Agreement
for the transfer of federal Gas Tax Fund which took effect on April 1, 2014.
The City of Kitchener has been a recipient of the GTF since its inception in 2005. In order to
continue receiving GTF, the City of Kitchener must enter into a new agreement with AMO. The
remainder of this report highlights the major changes under the new agreement.
REPORT:
The new agreement introduces some changes that benefit municipalities including the City of
Kitchener. The three most significant changes are:
1) Permanency
The GTF is now permanent federal legislation, and the Municipal Funding Agreement (MFA) is
now for 10 years (runs until 2023).
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2) Funding levels have been reset and will be indexed over the life of the agreement
Funding allocations for 2014-2018 have been calculated based on population data from the
2011 Census (previous allocations were based on the 2006 Census), and allocations for 2019-
2023 will be based on the 2016 Census. Further, according to published materials, municipal
allocations will be inflated in 2016 and 2018.
3) New eligible categories of infrastructure
Municipalities can now invest in 17 eligible infrastructure categories as opposed to the 7 that
were previously allowed. The eligible categories include:
• Local roads and bridges • Regional and local airports
• Public transit • Broadband connectivity
• Drinking water • Brownfield redevelopment
• Wastewater • Sports infrastructure
• Solid waste • Recreational infrastructure
• Community energy systems • Cultural infrastructure
• Capacity building • Tourism infrastructure
• Short-sea shipping • Disaster mitigation
• Short-line rail
More detailed discussions about the use of increased GTF and new projects that now qualify
due to the expansion of eligible categories is planned as part of the 2015 capital budget
process.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Goal: Financial Management
Strategic Direction: Reduce reliance on taxes
FINANCIAL IMPLICATIONS:
In order for the City of Kitchener to continue receiving GTF, the agreement must be signed.
Failure to do so would forfeit approximately $6M of funding.
The assumptions used by staff to project the GTF transfers to the City of Kitchener are
consistent with the amounts shown in the agreement for 2014 and 2015. For 2016 and beyond,
the agreement shows higher transfer amounts than anticipated by staff due to the indexing of
GTF. The additional funds due to indexing will be the subject of further discussions as part of
the 2015 capital budget process.
COMMUNITY ENGAGEMENT:
Inform—This report has been posted publicly as part of the agenda to inform the public.
ACKNOWLEDGED BY:
Dan Chapman, Deputy CAO (Finance and Corporate Services)
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