Premier Doug Ford says his government has cancelled retroactive funding cuts to municipalities.

The Progressive Conservative government has announced funding cuts to public health, child care, tourism and conservation authorities, as it tackles an $11.7-billion deficit.

The cuts combined with the cancellation of an increase to municipalities' share of the gas tax mean local governments would be out well over half a billion dollars annually.

Municipalities have been pushing back hard against the funding cuts, which were announced after they already passed this year's budgets.

Local government leaders warned that they would be forced to raise taxes or slash services as a result of the cuts.

Barrie Mayor Jeff Lehman says the city of Barrie gets about $12-million per year from the province for things like paramedic services, public health, and policing.

"One of the challenges that the cuts created was that they were being made April, May, in the year, and the city, of course, has already set its budget, and we're already halfway through our fiscal year. So the problem that created in Toronto, and in fact, it creates it for Barrie and everywhere else, is we have to make up that money," he explains. "So it was a very difficult position that the government had put us in with these cuts, and by withdrawing them today, I think they've done the right thing."

The announcement doesn't mean cuts won't still happen, but the province plans to work with municipalities to find savings going forward. Lehman says it's exactly what Ontario's mayors have been wanting.

Last week, Ford said the province would pay for them to get outside line-by-line budget reviews done.

- With files from Aileen Doyle, CTV Barrie