I do not have those figures at hand, but I think that if we looked at the municipalities' debt levels, it is not very high, because, you are right, they can only borrow for capital projects. If you take provinces and municipalities together, their debt level is lower than the federal government. They have about the same amount of revenue as the federal government. They have more or less the same tax base. There is no reason in principle for provinces not to be able to approve the funds required for infrastructure projects, just like the federal government.
On February 10th, 2009. See this statement in context.