Local Government Minister Bruce Fitch is defending the provincial government's new formula to provide equalization funding to municipalities.

Fredericton Mayor Brad Woodside has accused the province of punishing the capital city with a grant cut.

Fredericton will lose nearly $4 million over the next three years under this new funding arrangement, making it the hardest hit.


Local Government Minister Bruce Fitch says his department will ensure each community gets at least as much money as last year. (CBC)

But Fitch contends Fredericton's tax base has been growing at well above the rate of inflation.

In 2002, Fredericton's municipal tax base was worth $3.1 billion and the property tax rate was $1.4076 per $100 of assessed value. In 2013, Fredericton's municipal tax base will be $6.3 billion and the current property tax rate is $1.4111 per $100 of assessed value.

The city also gets a large share of government money in other ways, the local government minister said.

"You look at all the people that are looking at Marysville Place, the Hugh John Flemming Building, Service New Brunswick, NBLC, Invest NB, Kings [Place], the [legislative assembly] building, [the] Centennial [Building], Stan Cassidy Centre [for Rehabilitation], and all the schools.

"There is a significant amount of money being spent within the boundaries of the City of Fredericton that a lot of other municipalities are saying, 'Hey, that's not fair. They're getting more than their fair share,'" he said.

"For the last 20 years, the old formula hasn't been workable," said Fitch.

"This provides equalization."

Once the changes are implemented, 59 communities will come out ahead of the current unconditional grant, while 46 will fall behind, said Fitch.

But his department will ensure each community gets at least as much money as last year, he said.

Fredericton's mayor slammed the new funding formula during his annual state of the city speech last Thursday.

Woodside said the provincial government cannot turn its back on urban centres, such as Fredericton, Moncton and Saint John because they are the economic engines for the province.

The new $66-million funding arrangement will have a base funding allotment of almost $12 million that will be divided among municipalities and rural communities.

However, there will be a $54-million equalization component to the new program. The financial changes will be phased in over the next three years.