Some cities, towns and villages argue the amount of money that is available is more important than how it is allocated
The provincial government funding formula for Alberta’s cities, towns and villages will be getting a makeover as the Municipal Sustainability Initiative in place since 2007 is replaced by the Local Government Fiscal Framework.
Some Alberta communities say there are some pros and cons to the new funding system, which allocates infrastructure money for roads, water systems and recreational facilities, but they fear the new structure will result in fewer resources for towns.
Acme, Alta., mayor Bruce McLeod said provincial infrastructure funding is critical to his village of 600 a little more than 80 kilometres northeast of Calgary and small communities like his just can’t survive without it.
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But that pot of money has become progressively smaller and the new funding model might result in further reductions.
“The base funding has decreased over the last number of years, significantly from what it was originally established at,” he said during a Alberta Municipalities meeting in Medicine Hat earlier this month.
The organization, formerly known as the Alberta Urban Municipality Association, will be helping to develop the Local Government Fiscal Framework (LGFF) parameters but within the government’s $1.7 billion over three years outline, according to president Cathy Heron.
“It’s not so much the allocation of the formula, it’s the size of the pot,” said Heron about issues with LGFF. “This is a 37-percent decrease over the 10-year historical average for municipalities.”
Heron, who is also mayor of St. Albert, Alta., said the decrease in funding coming when costs continue to rise is stressing local communities.
Asked if the change in Alberta’s fiscal situation due to provincial coffers being reinvigorated with oil and gas revenue will result in a reassessment of the situation, Heron replied, “no but it’s still early as they just declared their surplus this spring.”
She discredited opinions of some in provincial government that municipalities have unrealistic requests when it comes to infrastructure funding.
“There are studies out there that say we only get eight cents per every dollar in taxes collected and that’s just not enough when we own 60 percent of the assets in the province,” she said.
McLeod said municipalities are understanding of provincial finances and are willing to work with the up and down nature of them.
“What we’re saying here is in good times, we should get some more. In bad times, we’ll bite the bullet with you too,” he said. “Is it a partnership or isn’t it a partnership because in a partnership, we go along when it’s good, we go along when it’s bad.”
Bill Rock, mayor of the Village of Amisk in central Alberta and a candidate in the upcoming UCP leadership race, said the original MSI base rate was fair though there were some issues as the program matured.
“The funding has not kept up with the cost of inflation, it wasn’t very good at adapting to population growth and we got front loaded during COVID and then all of a sudden cut back,” said Rock.
Asked if he would advocate for more municipal funding if elected as UCP leader and subsequently become premier in the process, Rock said he would look at saving some of the province’s new found wealth for a long-term solution and providing some funding guarantees over a decade.
“Most of us can work with 10 years of funding. Right now, the government is telling us we need a 10-year funding plan but we’re only going to give you a year of funding. How do you build a 10-year plan with one year of funding?”
Rock added the provincial government has been good in discussing issues with Alberta’s urban and rural municipal associations but would like to see improvements.
The Alberta government acknowledges the reduction in annual funding to municipalities but pegs those reductions at 25 percent less from levels between 2021 and 2024 before the new formula takes effect in the fiscal year 2024-25. According to the Alberta government’s fact sheet on the reduction, the move will put the province’s formula more in line with its counterparts in Canada.
