The federal government is negotiating an agreement with the Manitoba School Boards Association to accept and distribute an estimated $5.3 million in carbon tax revenue, after the funding intended for energy efficiency retrofits within Manitoba schools was rejected by Premier Brian Pallister last month.

“While the federal government can’t give the funding directly to schools, we look forward to working with the Manitoba School Boards Association on an agreement for it,” federal Environment Minister Catherine McKenna confirmed in a statement Wednesday morning, saying the government was “disappointed” that their plan for allocating the money to schools in the province couldn’t proceed as originally planned.

McKenna announced earlier this summer that the federal government planned to put three per cent of this year’s carbon tax revenues towards projects to make schools more energy efficient. The governments of Ontario, Saskatchewan and New Brunswick — jurisdictions in which the federal levy is collected — each agreed to that spending plan in principle, though provincial environment ministers raised additional questions and concerns in response. Pallister, meanwhile, accused the federal government of overreaching into provincial areas of responsibility, telling local media the plan was a “hoax” and calling it a “PR campaign” for the carbon tax.

READ MORE: Ontario, Sask. and N.B. agree to feds’ carbon tax school spending plan, Manitoba rejects it

Manitoba’s Sustainable Development Minister, Rochelle Squires, responded to Wednesday’s development by saying the federal government was playing a “pre-election shell game” — calling the portion of the carbon tax revenue earmarked for the school boards “tiny” and noting that the school boards were already “fully funded” by taxpayers within the province.

“It’s unfortunate the Trudeau Liberals won’t simply recognize that Manitobans shouldn’t be paying Ottawa’s rising carbon tax in the first place,” Squires wrote in a statement to iPolitics, which championed the province’s own Climate and Green Plan over the federal levy.

The Manitoba School Boards Association also confirmed the new plan on Wednesday, releasing a statement saying they would receive funds in the 2019-20 fiscal year if negotiations were successful. Association president Alan M. Campbell wrote that the group would be “well positioned” to coordinate receipt and payment of the funds to school board members. Campbell wrote to Trudeau’s office to express concern about the Manitoba retrofit funding situation on July 24, according to response sent by McKenna and shared with iPolitics. “[The] Department understands that your organization has the ability to enter into a legally binding funding agreement with the Government,” she replied to Campbell, extending an invitation to work together and“more fully explore potential options” to delivery the retrofit money.

McKenna took a shot at Pallister to reporters on Wednesday, after an announcement in Burlington about funding Great Lakes protection projects, pointing out Pallister’s change-of-plan for implementing a carbon tax in Manitoba. “[He] did actually have a price on pollution, but then flip-flopped,” she said.

Pallister has told local media that changed his mind about a planned $25-a-tonne carbon tax after a September meeting with Prime Minister Justin Trudeau at the Manitoba legislature in which, he told reporters, it became clear that Ottawa would eventually increase the carbon tax to $50 per tonne.

The federal Liberals’ carbon tax passed into law this year, and is only applied in provinces that don’t have an emissions-based levy that is up to the federal par. All revenues must return to the jurisdiction where they were collected, per the legislation — with the majority, 90 per cent, promised to return to consumers through a tax rebate, and the remaining 10 per cent to be used to help municipalities, hospitals, universities, schools and and small and medium-sized businesses become more energy efficient.

Manitoba is heading into an election this fall, with a date set for Sept. 10.

BACKGROUNDER: Feds pledge $60 million in carbon tax revenues to help schools become more energy efficient