Municipalities maintain our roads, bridges, transit services, water and wastewater systems and provide our policing, emergency services, recreational and cultural facilities, and much more. However, they are struggling to fund, maintain and improve these services due to an outdated revenue framework that is creaking under Canada’s record population growth.

The analysis and recommendations presented in FCM's paper were developed after an extensive research phase that involved gathering data from municipalities, provincial and territorial municipal associations, and public finance experts. The collected information highlights the increasing necessity to identify sustainable financial remedies for municipalities to prevent residents from being left behind.

FCM is calling on federal, provincial and territorial governments to commit to a new Municipal Growth Framework to modernize municipal funding.

This would consist of reforming how we fund local governments and support Canadians’ quality of life, while helping to address our most pressing national challenges, including infrastructure renewal, climate change, public safety, and housing and homelessness.

  1. Municipal Finance Reform

FCM is calling on the federal government to modernize municipal funding by:

  • Tying federal transfers to population and economic growth by linking them to Canada’s GDP.
  • Increasing direct annual transfers to municipalities by $2.6 billion, bringing the total to $5 billion when paired with the existing Canada Community-Building Fund. This is equivalent to the revenue generated from half of a percentage point of the federal GST.
  • Broadening eligible expenses under federal transfers to include operating costs as well as capital costs (infrastructure), enabling municipalities to direct funding towards local priorities that enable population growth and economic development—recognizing that municipalities are in the best position to identify and respond to local needs.

FCM is calling on the provinces and territories to modernize municipal funding by:

  • Agreeing to match the level of funding provided to municipalities by the federal government, contributing an equivalent of $5 billion per year in new PT funding to municipalities at the national level.
  • This could be facilitated by:
    • Reforming municipal finance in their jurisdictions.
    • Allocating a portion of provincial sales or income taxes to municipalities,
    • Revising shared responsibilities with PT.
    • Granting municipalities new powers over taxes or user fees.
  1. Ending Chronic Homelessness

FCM is calling on all orders of government to develop a comprehensive plan to end chronic homelessness, which clearly lays out roles and responsibilities, presents a timeline with clear milestones, and includes:

  • Coordinated investment and policy measures to increase the supply of non-market housing (housing for low- and moderate-income households, often through public or co-op operators) and prevent individuals from becoming homeless.
  • New investments in supportive housing to be funded through a Housing First-approach, with cost-sharing between federal, provincial, and territorial governments.

The Federation of Canadian Municipalities unites more than 2,100 local governments at the national level, representing more than 92 per cent of Canadians in every province and territory.

For more information: FCM Media Relations, (613) 907-6395,


Big City Mayors' Caucus
Economic development
Municipal finance
© 2024 Federation of Canadian Municipalities