Fredericton council has decided to pull its funding from Enterprise Fredericton, following the lead of the provincial and federal governments.
In 2012, council contributed about $179,000 to the agency, which was formed to encourage business and job growth in Fredericton, New Maryland and Oromocto.
But Fredericton Mayor Brad Woodside says without funding from the other levels of government, the city could not keep Enterprise Fredericton going.
"It was obvious we couldn’t carry the load alone, and the agency’s staff were left hanging, so council made the decision to bring clarity to the situation," he said in a statement.
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"That mean serving notice that our funding to Enterprise Fredericton would also come to an end this year."
The city is not getting out of economic development, but needs to ensure its dollars are spent in the most efficient way, leveraging the most value for citizens, Woodside said.
"This is a critical time for the economy in Fredericton and around the province. We need to create jobs," he said.
City officials have started discussions with community stakeholders in local economic development to determine where city funding can have the greatest impact, Woodside said.
Enterprise Fredericton had been funded by three levels of government.
In May, however, the federal government announced it was eliminating its annual operational funding to all regional economic development groups in the Atlantic provinces through the Atlantic Canada Opportunities Agency.
This fall, the provincial government also decided to pull its funding.
"We didn’t set out to shut down Enterprise Fredericton," said Woodside.
"But you can’t have a stool with one leg. That’s the situation we found ourselves in."
Saint John mayor concerned
Enterprise Saint John is likely going to face a similar fate as its counterpart in the capital city.
The city's funding to the economic development agency ends in May.
Saint John Mayor Mel Norton said he's concerned about statements he's heard that the provincial government plans to set up its own economic development agencies around the province.
He said he fears a provincial office will not be as responsive as the existing system.
"A city like Saint John, in an urban environment, we need to still service the local concerns and we still need to service the local entrepreneurs. There's just a lot more to be done," he said.
Norton said the private sector may wish to partner with the city and outlying communities to come up with a new model.