The president of the Federation of Northern Ontario Municipalities says he doesn't know why the province is phasing out a program that benefits so many northern communities.

Al Spacek said the Power Dam Special Payment program — a subsidy started 10 years ago by the province in compensation for banning the collection of property taxes on hydro dams — costs the province $18 million a year.

“It's not a large amount of money in the scheme of things, yet it has a very large detrimental impact on municipalities,” he said.

“Many of our member municipalities within the FONOM territory are affected by this in a very negative way.”

Wawa is particularly hard hit by the subsidy claw-back.

In response, Mayor Linda Nowicki said the town is going to stop funding its share of some provincial services.

“This is how serious this is. It not only affects Wawa, but it affects the whole region, because we are tied together with these provincial obligations.”

Spacek said he doesn't know why the province is phasing out the program.

“You know, we haven't got a straight answer on that yet,” he said.

“That's something I'm looking forward to having more conversation with them on.”

Sudbury and Sault Ste. Marie are also affected by the shrinking payment.