Loney Releases ‘Fix It First’ Infrastructure Strategy
Prioritizes maintaining and repairing existing roads before building new ones
Released September 22, 2022
WINNIPEG, Manitoba – Mayoral candidate Shaun Loney announced three major reforms that will bring more transparency, fairness and stability to infrastructure funding and end the City of Winnipeg’s long-standing practice of building more roads than it can afford to properly maintain.
The first reform will be to adopt a ‘fix it first approach’ that prioritizes repairing and maintaining existing roads before building more.
Secondly, Loney announced he will convene other levels of government to negotiate a fix for the broken municipal-provincial-federal funding model for transportation infrastructure that would replace multiple, convoluted taxes and fees with distance-based fees. Loney said the best way to begin would be with a voluntary pilot.
The final reform Loney pledged to implement is to adjust the weighting of criteria used by the civic administration to properly value infrastructure projects that can usher in an era where money-saving, low-carbon transportation options are more widely adopted.
“My specialty is fixing broken systems, and how we fund the roads right now is a mess,” said Loney. “Winnipeggers deserve a new mayor who will work with the provincial and federal governments to modernize the funding model, catch up on our multi-billion dollar repair backlog and address the chronic underfunding of transit and active transportation infrastructure.”
Loney noted that both senior levels of government have signaled their willingness to explore better ways to finance municipal infrastructure. The Manitoba Budget 2022 states that the provincial government is willing to work with municipalities to “explore, support and facilitate innovative infrastructure funding solutions to make large, strategic and complex projects possible.”
Infrastructure Canada is in the midst of a public consultation to gather feedback to inform the design and delivery of permanent funding to expand and upgrade public transit and active transportation networks in communities across Canada.
More on Loney’s ‘Fix it First’ Approach
“Winnipeggers are pragmatic. They understand when you are near your limit to borrow more money but your house has a leaky roof, you should prioritize fixing the roof first before building an expensive addition,” said Loney. “Sorry, the credit card is maxed out.”
More on Distance-Based Fees
“My preference is to replace the confusing patchwork of funding sources: dedicated property tax increases, provincial gasoline and diesel taxes, vehicle registration fees, federal excise tax, GST and carbon tax on fuel for vehicles, with something much more straightforward, transparent and dependable.”
Loney noted that Winnipeg is not alone in exploring more sustainable and equitable methods to replace declining gas tax revenues. “There are dozens of other jurisdictions that have acknowledged this issue and are already exploring solutions, especially distance-based fees for motorists.”
“Continued reliance on gas taxes is a doomed approach,” declared Loney. “It is inevitable that this source of revenue will decline not only because of inflation, but will start to shrink as more stringent federal fuel economy standards come into effect and people shift to electric vehicles.”
More on Modernizing Infrastructure Weighting Criteria
There is an urgent need to update the weighting used to rank infrastructure spending to build infrastructure that will accelerate the shift to low-carbon transportation options.
Deeply reducing our reliance on imported fossil fuels can help generate over $1.2 billion annually in net savings for Winnipeggers and create over 100,000 person-years of employment according to the recently-released City of Winnipeg Community Investment Energy Roadmap.
“There is a lot of money that is already being spent. I’d rather keep that money here at home”, said Loney.”
Backgrounder
The City of Winnipeg infrastructure has a massive, unfunded infrastructure deficit.
Replacement cost of Winnipeg’s existing public infrastructure is approximately $35 billion.
Most recent estimate is that Winnipeg’s infrastructure deficit from 2018 to 2027 is $6.9 billion; 58 percent to maintain existing infrastructure and 42 percent for new infrastructure.
The largest portion (about 70 percent) of Winnipeg’s infrastructure deficit is for transportation (i.e., local and regional streets, bridges, transit and active transportation).
The City of Winnipeg’s borrowing capacity for major infrastructure projects is approaching its limit.
Due to increased debt, the City’s ability to borrow further to finance infrastructure investments is more restrictive now than in the past.
Additional revenue is needed to borrow more and make annual interest payments.
The City of Winnipeg’s practice of deferred maintenance is expensive.
Fixing a road that is already worn out can cost three times as much as keeping a road in good condition with regular maintenance according to the American Association of State Highway and Transportation Officials.
A study by the Canadian Automobile Association estimates that driving on poor roads costs the average driver an extra $126 annually per vehicle in increased maintenance costs.
Gas taxes to support transportation infrastructure have badly lagged inflation.
The federal excise tax on gasoline (10 cent per liter) has been fixed since 1995. The provincial gasoline tax (14.0 cents per liter) hasn’t changed since 2012.
The Consumer Price Index has increased by 74 percent and 25 percent over these periods.
Construction prices in Winnipeg have increased even more, jumping by about 12 percent over the most recent 12-month period according to Statistics Canada.
Reductions in vehicle registration fees have further reduced the pool of potential funding to support the maintenance of Winnipeg’s transportation infrastructure.
The Government of Manitoba projects that it will collect $166 million in vehicle and motor carrier licenses and fees. The largest portion of this revenue is collected from residents, businesses and other organizations within the City of Winnipeg.
Following reductions in 2020 and 2021, a further reduction in vehicle registration fees in 2022 for most non-commercial vehicles will reduce annual revenue by $45 million.
Improved fuel economy standards and a shift to electric vehicles will cause gas tax revenues to stagnate and then decline.
As part of its climate strategy, the Government of Canada has instituted progressively more stringent greenhouse gas emission standards for new light duty passenger cars and trucks.
Canada has announced its intention to make these standards even higher post-2025 by aligning these standards with the most stringent performance standards in North America.
In 2021, Canada set a new, more ambitious target that 100 percent of new light duty cars and trucks must be zero-emission by 2035. Almost all manufacturers plan a switch to battery electric vehicles to meet this requirement.
Many jurisdictions across North America are exploring alternatives for infrastructure funding to address a projected decline in gas tax revenues.
The most widely considered alternative being explored are ‘distance-based fees. With this approach the amount vehicle owners pay is based on the number of miles and the vehicle they drive to reflect the resulting wear and tear on roads.
Manitoba’s immediate neighbour to the south, Minnesota, is a national leader in exploring distance-based fees. The state has introduced a voluntary pilot project to gradually introduce distance-based user fees to increase public awareness and comfort with this approach.
Sources
Budget 2022. Government of Manitoba, April 12, 2022.
2018 State of the Infrastructure Report. City of Winnipeg, .
2020 Infrastructure Plan. City of Winnipeg, December 2019.
Unfunded Capital Projects Detail. City of Winnipeg, May 2019.
Fuel Economy in Canada. International Energy Agency, December 13, 2021.
Humphrey School Researchers Study Distance-Based Fees as Alternative to Gas Tax.
University of Minnesota, August 12, 2021.City of Winnipeg Community Energy Investment Roadmap.
Sustainability Solutions Group, June 2022.Cost of Poor Roads in Canada. Canadian Automobile Association, March 30, 2021.