P.E.I. municipalities are not getting the money they need for infrastructure and economic development, says the Opposition, because they can't afford to participate in a provincial program.

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Towns and villages can't afford to participate in the Island Community Fund, says MLA Colin Lavie. (Province of P.E.I.)

The Island Community Fund was established to help Island municipalities improve infrastructure and promote economic development. The program ran out in March, but it was extended in this week's budget, with another $2.3 million for the coming year.

That will still bring it up short of the original $27.5 million plan. This year's auditor general's report says less than $20 million has been spent.

The province says it didn't always receive enough applications to be able to award all the funding in any given year. Opposition MLA Colin Lavie said that's because many municipalities couldn't afford the matching dollars to get projects off the ground.

"You've got to have money to get money," said Lavie.

"And these communities, this government has got these communities broke, and they can't afford to put in their share for this community fund. It's simple."

Rural Development Minister Ron MacKinley, who's responsible for the Island Community Fund, said ACOA has contributed millions of federal dollars and that has helped make up for the money the province hasn't spent.

The auditor general's report also says the money that was awarded didn't all go where it was supposed to.

Government had said at least half the money should go to economic development projects, but only one-quarter did.