KINGSTON, Ont. - Municipalities that rely on the Ontario Provincial Police are in a tight spot after the governing Liberals handed the force a five per cent pay hike while demanding a wage freeze for public sector workers, critics said Thursday.

"I think it was very irresponsible for the government, when they're talking about wage freezes, to go and give a five per cent increase to the OPP," said Thunder Bay Mayor Keith Hobbs.

The move will have "huge ramifications" on smaller communities like Kenora and Atikokan that rely on the OPP and are struggling to keep their budgets in line, he said.

Many of them opted out of municipal policing and signed contracts with the OPP because they thought it would be cheaper, Hobbs said.

"It was cheaper at one point, but now with this wage contingency, it's going to drive up costs to a high degree for these smaller communities, so they're going to feel a real big impact."

It will also burden cities like Thunder Bay, because the local police force will likely ask for the same increase, said the retired cop, who once negotiated salaries as president of the police association.

It's a significant chunk of change, as policing already accounts for $32 million of the city's $200-million budget, Hobbs added.

"Now when we're telling other city employees that we have to hold the line at 1.7 (per cent), it gets pretty tough," he said.

The five per cent increase was finalized in November, after the government unveiled a spring budget that called for a two-year wage freeze to help slay a record deficit of nearly $20 billion.

Premier Dalton McGuinty danced around the issue in Kingston, where he pitched his economic plan to a business audience.

The premier, who urged police and municipalities to do their part to rein in salaries just days after the spring budget was tabled last year, insisted that taxpayers won't pay for any salary increases.

"I think everybody knows that they're going to have to find savings from within," he said.

"They need to do that in a way that doesn't compromise the quality of our public services."

But McGuinty wouldn't say who should find those savings: the municipalities or the police.

"That's something they'll have to sit down and talk about from within and organize themselves."

The OPP contract shows that all the Liberal talk about wage restraint is "nothing but a joke," said NDP Leader Andrea Horwath.

"It shows the government talking out of both sides of its mouth, which it's done all along on this wage freeze issue," she said in Toronto.

"You can't expect people like nurses to take wage freezes while top CEOs in hospitals are having double-digit increases. We figured it would be a failure and we were right."

Officials at the Ministry of Government Services -- which negotiated the contract in 2008 -- defended the Jan. 1 pay hike, saying the OPP had fallen far behind other police forces.

It brings the annual salary of a first-class constable to $83,483, in line with York and Toronto police wages, said spokesman Michael Patton.

The Ontario Provincial Police Association also agreed to a salary freeze for 2012 and 2013 -- which meets the province's goals, he added.

"The fact that we negotiated two years of no wage increases in 2012 and 2013 is a significant consideration for arbitration boards and negotiations across the sector," Patton said.

"We believe our efforts could assist in lowering police wage-settlement rates."

But critics argue that a clause in the contract effectively guarantees that the OPP will be No. 1 in the province come 2014.

Patton would only say that the wage rates of OPP officers in 2014 "will be aligned with other major forces in Ontario."

But it's about more than just dollars and cents, Hobbs said.

"This is about fiscal responsibility, and this is the government saying they're going to do one thing on one hand, and they do the total opposite," he said.

Last spring's budget called for a two-year freeze on wages for more than a million public sector workers to help fight a record provincial deficit of about $20 billion.

The government also froze the pay of non-unionized public servants, while members of provincial parliament took a three-year wage freeze. But the Liberals stopped short of introducing legislation to impose the freeze.

Efforts to curb wages have been frustrated by several rulings by independent arbitrators, who have awarded pay raises despite the government's wishes.