Fredericton Mayor Brad Woodside slammed the Alward government’s new municipal equalization funding plan during his annual state of the city speech on Thursday night.

Local Government Minister Bruce Fitch unveiled the plan earlier in the day, which will replace the old unconditional grant system.

The new program will cost growing cities, such as Moncton, Fredericton and Saint John, but it will deliver additional cash to struggling cities, particularly in rural and northern New Brunswick.

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

Woodside did not hide his frustration during his annual address.

"I'm extremely upset. I've been around for a long time, and this is as bad as I have ever seen it,” Woodside said.

"You're giving me four cents and taking a dollar and expecting me to run a city, you know. Come on. Let's be serious," he said.

Woodside contends Fredericton is being penalized for handling for handling its finances properly.

"We're not happy in this city. We have not been treated fairly," he said.

But hearing Woodside complain didn't sit well with some people in other communities, such as Diane Bergeron in the Village of Gagetown.

She says Fredericton has most of the highest paid civil servants in the province and lower property taxes. "Where is the fairness in there?"

"I think the whole system of the unconditional grant was unfair from the start," said Bergeron, president of the the Gagetown and District Recreation Council.

The village's recreation centre, which has a small hall, a kitchen and a skating rink, was built with the sweat and tears of locals, said Bergeron.

By comparison, Fredericton has a brand new sports complex, worth almost $30 million and a new downtown convention centre worth about the same amount.

"You know, we're only as strong as the weakest link," said Bergeron.

The $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.

While municipalities, such as Fredericton, Moncton and Saint John will be losing provincial funding, Fitch pointed out their local tax bases are continuing to grow.

Local Government Minister Bruce Fitch unveiled the new equalization system for municipalities on Thursday. (CBC)

In Fredericton’s case, the provincial government estimates the city will earn an extra $4.2 million in taxes based on the city’s growth.

Even after the $1.3 million is removed from the provincial grant, the provincial government estimates the capital city will still have an extra $2.9 million this year in revenue.

New Brunswick's capital city has seen a dramatic increase in its tax base in the last decade but has left tax rates stable.

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.

In contrast, the northern city of Campbellton will be gaining money under the new equalization system.

Campbellton's tax base in 2002 was $327.1 million and its tax rate was 1.6056 per $100 of assessed value. While the city's tax base has grown in the last 11 years to $455.3 million, the city has had to increases its property tax rate to $1.7504 to pay for its services.

The local government minister said the larger cities have the ability to pay for additional costs.

"If you're on [Employment Insurance] and you get a job you don't continue to get EI," Fitch told reporters on Thursday.

Fredericton’s mayor says he has no plans to increase taxes to offset the loss in provincial funding.

Woodside also said he doesn’t have a problem with helping other cash-strapped mayors.

But the mayor of New Brunswick’s third largest city said the provincial government cannot turn its back on the urban centres.

"We have no problem helping those who need help, that's who we are in New Brunswick, but I said, "Mr. minister, you got to keep your southern cities strong because they are your economic engines, that's where the limited revenue you're getting is coming from right now,” Woodside said.