Provincial Budget Signals the Need for a New Municipal Funding Model

Edmonton: Yesterday’s budget announcements have been met with mixed reviews from Alberta’s urban municipalities who remain concerned that minimal progress is being made with the $26 billion infrastructure deficit.

AUMA is pleased that the Province is honouring their $75 million committed increase to Water for Life, as well as Water and Wastewater funding. This funding is key to addressing aging infrastructure, of which approximately 42 per cent is over 20 years old. Infrastructure improvements will ensure our ability to meet increasingly stringent provincial and federal standards designed to protect human health and the environment. Other infrastructure opportunities will be advanced through the province’s plan to allocate $300 million from the Province’s Building Canada Fund (BCF) for municipal projects.

“Municipalities have shovel-ready and shovel-worthy projects that will support Alberta’s economic growth, environmental stewardship and well-being of our citizens,” said AUMA President Lisa Holmes. “With the federal government funding up to 50 per cent of local projects and municipalities having 10 per cent of the tax revenue for our portion, we hope the province will cover the remaining 40 per cent. This funding will enable prudent planning of priority infrastructure needs, while creating much needed jobs. AUMA appreciates Minister Larivee’s commitment to work with us on how this funding will be used.”

The rest of the budget is very much a reflection of why the municipal funding model needs to change. With this kind of volatility and lack of consultation by the province, it is unreasonable to expect that municipalities can carry out their required three-year operating and five-year capital planning when the province can’t keep committed funding levels stable for more than a year. We recognize times are tough, but it is very unfair for the province to download their shortfalls onto municipalities and the citizens in their communities. For example, the province had promised a $50 million increase for core infrastructure through the MSI program, and it actually reduced the program by $50 million, leaving an unexpected shortfall of $100 million. This decrease to MSI will impair the creation and expansion of much needed infrastructure, particularly in smaller communities. This reduction illustrates that the MSI program has never been sustainable and timeframes have to be extended due to greatly reduced funding.

“The government’s decision to download their $15 million obligation to pay a grant in lieu of taxes (GILT) on government owned social housing is inexcusable,” said Holmes. “It is especially frustrating that the government did not consult or communicate with municipalities on this decision in 2015, and has been unwilling to reconsider given the numerous examples of impact on other taxpayers.”

In Camrose, downloading of GILT means a shortfall of almost $150,000 that municipal property tax owners will have to pay. In Red Deer, it amounts to almost a half million dollars that other property owners will have to pay.

In small villages, the lost revenue equates to a significant portion of the property tax, leaving shortfalls of 5 and 3 per cent respectively in Vilna and Marwayne. The towns of Grimshaw and Mayerthorpe will also see lost property taxes of 3%.

The 50% reduction to regional collaboration ($20 million) is another unexpected barrier to planning and implementing sustainable infrastructure and services for Albertans.

Through the MGA Review, AUMA is seeking a new municipal funding model that calls for core grants to be statutory and indexed for growth. Municipalities also need greater ability to determine their revenue sources and set fees and charges.

About AUMA
Founded in 1905, the Alberta Urban Municipalities Association represents all of Alberta’s urban municipalities, including cities, towns, villages, summer villages and specialized municipalities, representing over 85% of Albertans. A dynamic and evolving association, AUMA advocates on behalf of members to provincial and federal government, as well as other stakeholder organizations.