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This article was published 23/8/2017 (1125 days ago), so information in it may no longer be current.

The Pallister government has backtracked on its promise of no-strings-attached funding to cities and towns and appears ready to initiate unprecedented involvement in municipal decision-making.

In a letter to the City of Winnipeg, the province said operating funding will be tied to "outcomes" and "expectations" that will be negotiated between city hall and the Pallister government.

In addition, the province appears to want to wade deeply into city hall governance, stating it wants to "work with the city to create both a one-year and five-year strategic capital plan to ensure both city and provincial priorities are met, and that we lever federal funding to match those priorities."

The new funding arrangement was disclosed to city hall in May, in a letter from Grant Doak, the then-deputy minister of the old department of Indigenous and Municipal Relations, to Doug McNeil, the city's chief administrative officer.

The letter was obtained through a Freedom of Information and Protection of Privacy Act request from the provincial NDP and provided to the Free Press.

In the May 10 letter, Doak, who is now the deputy minister of Crown Services, tells McNeil the province’s funding to city hall for 2017 would remain unchanged from 2016. It repeats the commitment made in the Tories' spring budget that the funds are "unconditional," but then Doak informs McNeil the province is tying the funding to outcomes and expectations.

"This provincial operating funding will be unconditional, providing greater flexibility for Winnipeg to allocate funding to address its priorities," Doak states in the letter. "That said, the province wants to ensure that funding is focused on the achievement of outcomes. We will enter into discussions shortly with the city to define expected outcomes and establish a communications protocol for the provincial funding to be provided."

MINKEVICH/WINNIPEG FREE PRESS FILES Doug McNeil, the city's chief administrative officer.

Doak said the province will place outcomes and expectations on civic departments, including the Winnipeg Police Service.

"In particular, Manitoba Justice will work with the city to set expectations and outcomes related to funding for the Winnipeg Police Service, including positive outcomes to be achieved through the operation of units like the court disclosure unit," Doak writes.

City hall has long chafed at any conditions the province has placed on funding and there has been strong disagreement over what infrastructure projects should be jointly funded. Winnipeg and the rural municipalities launched their Fair Share, Fair Say campaign leading up to the 2016 provincial election, demanding an alternative funding source from the province and the right to determine alone how money would be spent.

Premier Brian Pallister said the so-called single basket funding model met the municipalities’ request for a "fair say," repeatedly claiming future funding would be unconditional.

Municipalities used to receive provincial funding linked to various grants – transit, operating, policing, Dutch elm disease, libraries, youth recreation – but the Pallister government changed those rules with its spring budget, providing the municipalities with essentially a single lump sum – known as the single basket funding model – and said it was leaving it up to municipalities to decide how to spend the money.

That’s why the province’s 2017 budget caught city hall by surprise. The new arrangement ended the 50/50 cost-sharing for transit operating costs and bus purchases; and, similarly, ended the special grant to cover the Winnipeg Police Service helicopter operating costs. In both cases, city hall had to cover increases in those budgets through the "single basket" funding. The Pallister government’s response was that it was providing the funding, leaving city hall to decide how to spend the money.

Now, the Pallister government appears intent on managing city hall and how it will spend provincial dollars. The new terms of provincial funding appear to show the Pallister government wants to become deeply involved in municipal finances and decision-making. In the past, the two levels of government had their own list of infrastructure projects and would negotiate which ones they could agree on.

Key players at city hall and the provincial government declined to be interviewed for this story.

City hall said McNeil is "away" and could not be reached for comment but his staff said discussions with the province are ongoing.

Mayor Brian Bowman was not available for comment. His staff said "he was aware" of the Doak letter. No explanation was given by Bowman’s staff as to why the mayor had withheld the existence of the letter and the province’s intention from executive policy members and the rest of council.

Jeff Wharton, appointed to the cabinet last week as the new municipal relations minister, declined to be interviewed. His staff declined to explain what Doak meant by "expectations" and "outcomes" and how the province plans to work with city hall on its capital budgets.

"Wharton looks forward to meeting soon with Mayor Bowman and working collaboratively to build on this new basket funding model and delivering continued improvements," said a statement from Wharton’s office.

aldo.santin@freepress.mb.ca