By William Crooks
Local Journalism Initiative
In the wake of a record-setting $13.6-billion deficit in the 2025–2026 provincial budget, municipalities across Quebec—including those in the Estrie region—are voicing serious concerns about what they see as a continuing provincial retreat from funding key local infrastructure. The Union des municipalités du Québec (UMQ), representing towns and cities across the province, says the government is offloading more responsibilities onto local governments without providing the financial means to match.
“We were frankly surprised,” said Martin Damphousse, president of the UMQ and mayor of Varennes, in a March 26 interview. “It’s a historic deficit, and at the municipal level, we’re forbidden by law from running a deficit at all. The contrast is stark.”
The provincial budget, tabled March 25 by Finance Minister Eric Girard, is shaped by rising trade tensions with the United States and what the government calls a “turbulent economic period.” Despite the economic uncertainty, the province is pushing ahead with major investments in innovation, public services, and infrastructure. The 2025–2035 Québec Infrastructure Plan (QIP) has been raised to $164 billion, up by $11 billion from last year.
But Damphousse says the increase does little for municipalities. “The share going to municipalities is just 4.3 per cent, or $7 billion out of $164 billion,” he noted. “That’s down from 7.5 per cent a few years ago, even though infrastructure deficits and costs have only increased.”
Budget highlights: growth and cuts
According to a series of press releases, the government’s overall approach in Budget 2025–2026 is to weather economic instability through targeted spending while planning to restore balance by 2029–2030. It includes $12.3 billion in new measures over five years to stimulate the economy and support Quebecers. Here’s how some of that breaks down:
Wealth creation and innovation
A total of $5.4 billion is earmarked over five years to stimulate economic growth. This includes:
– $4.1 billion to help businesses hit by U.S. tariffs, fund export and investment projects, and encourage diversification.
– $604 million to boost innovation through the new research, innovation and commercialization tax credit (CRIC) and other initiatives.
– $759 million to support regional development, including the forestry sector, tourism, critical mineral exploitation, and rural internet connectivity.
Services for Quebecers
Another $6.8 billion over six years is set aside to improve public services:
– $3.9 billion will go toward healthcare, including funding for frontline care, youth protection, and vaccinations.
– $1.1 billion is allocated to education and youth development, with funds for recreation, sports, and converting childcare spaces into subsidized options.
– $550 million will support vulnerable individuals, including $303 million for housing needs.
– $717 million will promote Quebec culture and identity, and $636 million will fund justice, sustainable development, and road infrastructure.
Tax system overhaul
The government says it has reviewed 170 tax measures and is introducing changes projected to free up $3 billion over five years. Highlights include:
– Replacing outdated tax credits with streamlined systems like the new CRIC.
– Ending electric vehicle toll exemptions by 2027 and introducing an annual road contribution from EV users.
– Eliminating lesser-used or outdated tax breaks to better align with current economic and environmental priorities.
According to Minister Girard, “We are taking action to help our businesses by focusing on their capacity to innovate and on the contribution of our regions.”
Mixed blessings for the Estrie region
For Estrie, some budget measures may bring modest benefits. Notably, $250 million is planned for local road maintenance in 2026–2027. There’s also $94.7 million for the forestry sector over three years—a significant nod to the economic importance of forestry in the region. Housing measures include $228 million over three years for low-rent housing and $175 million over five years to support the accommodation of vulnerable individuals.
But Damphousse says these investments are too little and too late.
“These are over three to five years, often with no funding this year. When you break those amounts down annually, it becomes very small. Meanwhile, our needs are immediate and growing,” he said.
The strain is especially acute when it comes to housing and infrastructure. Municipalities are being asked to contribute land for new schools and adapt their infrastructure to meet climate challenges—costs they can’t afford without more support.
“In Estrie, we’re right next to the U.S. border,” Damphousse pointed out. “With the tightening trade environment and tensions over things like cross-border library services, we’re worried these pressures will get worse.”
He added that municipalities in the region are also being hit hard by increased costs related to policing services.
“In many small communities—including places like Ayer’s Cliff—people are already complaining that SQ services are too expensive and don’t meet expectations,” he said. “Now the government is withdrawing more of its support. That means even higher costs for local governments.”
Fears of property tax hikes
Asked whether the growing financial burden will force municipalities to raise property taxes, Damphousse admitted that pressure is mounting.
“Municipalities always try not to raise taxes—it’s never popular. But as responsibilities increase and services are stretched, it’s harder to avoid,” he said. “We’ve already seen it with rising property valuations. Unfortunately, those increases end up reflected in tax bills.”
With housing costs, homelessness, climate resilience, and service demands all on the rise, local governments say they need more than words of support.
“It’s not just about money—it’s about fairness,” Damphousse said. “We’re expected to deliver more with less, and that’s not sustainable.”
An erosion of local democracy?
In a final note of concern, the UMQ also flagged the government’s decision to eliminate the provincial tax credit for donations to municipal political parties as of January 2026. Damphousse said the change could discourage political participation at the local level.
“It’s a small thing, but it matters,” he said. “Anything that puts a barrier in front of citizen engagement is a step in the wrong direction.”
Call for partnership
In its official statement, the UMQ stressed that municipalities are “critical players” in Quebec’s economic, social and environmental development. The organization is calling for a renewed, stable partnership with the province to ensure regions like Estrie can thrive.
“We need to work together to support the regions and protect the quality of life for Quebecers,” Damphousse concluded. “That starts with recognizing municipalities as full partners—not just service providers.”
While the government continues to frame its budget as forward-thinking and balanced in the long run, municipalities say the current gap between responsibility and funding is becoming unmanageable. Whether the province will respond to their concerns remains to be seen.
