Newfoundland and Labrador renewed a deal with the federal government on Wednesday for the federal Gas Tax Fund.
The agreement will provide $325 million to the province annually, and will remain in place for at least 10 years.
Ottawa also promises to make the approval process for projects much faster.
The fund will provide money for public infrastructure, and allows municipalities to choose and plan infrastructure projects they want to spend money on.
The list of eligible projects has also broadened to include culture, tourism, sport and recreation, giving municipalities more flexibility with the types of projects they fund.
Municipal Affairs Minister Clyde Jackman said it's the kind of arrangement municipalities need.
"It gives them more flexibility," he said. "And who better to know the needs of the local community than those who serve on the local community councils?"
St. John's Mayor Dennis O'Keefe also welcomed the funding renewal, noting there's no shortage of ways to spend the money.
"Developing infrastructure within our neighbourhoods is big on the wish list along with a new recreational facility and the waste-water treatment plant," said O'Keefe. "We certainly have to put money into public transit. It is extremely important for the future of the city and the region."
Since 2006, municipalities have used the funding for projects including waste management, road work, and water and sewer upgrades.