Alta. rural municipalities face more capital costs

A panel that was asked to look into how the province can balance the budget says municipalities should shoulder a larger share of the costs

Alberta’s rural municipality group is hoping to sit down with the province to discuss spending after it was recommended that towns and counties shoulder more building costs.

Al Kemmere, president of the Rural Municipalities of Alberta, said even though towns and counties acknowledged they need to help the province deal with the deficit, they have already been taking on a larger share of costs.

“We need to sit down with the province and share our municipal perspective so they can hear our side of the discussion,” Kemmere said.

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A third-party panel reviewing Alberta’s spending released the Blue Ribbon Panel report on Sept. 3, offering ways the province could cut spending to bring the budget into balance.

Along with recommending spending reductions in health care, education and public-sector compensation, the panel also said municipalities should take on more costs to save the province money.

It found the path to a balanced budget means Alberta would have to freeze spending for four years and cut at least $600 million in annual operating spending.

Regarding municipalities shouldering more costs, the panel said the province can’t maintain existing levels of municipal capital support, and that municipalities have tax room yet rely on increasing provincial grants.

Kemmere said municipalities technically do have tax room, as does the province, but said higher taxes aren’t what citizens likely want.

“The public has expectations of reasonable taxation,” he said. “I like to think we’ve been in that reasonable-taxation mode already.”

The province has made no commitments yet on what recommendations it will act on or how far it will go, but it’s expected it will reduce spending in the fall provincial budget.

However, if municipalities saw less money from the province, Kemmere said projects would either have to be deferred or municipalities would have to pass costs on to taxpayers.

He said municipalities could also reduce operational services to make up for extra capital costs.

“It all ties together,” Kemmere said. “But that’s why we want to sit down with the province and say this is going on and these are the impacts. Let’s try to work together so we don’t create an infrastructure deficit out of this approach.”

In the report, the panel also took aim at the Municipal Sustainability Initiative (MSI) grant program and the charter funding formula agreements that the province made with Calgary and Edmonton.

The panel said capital grants through the MSI program and the charter aren’t allocated in line with provincial goals and priorities.

Kemmere said the MSI program, which will expire 2021-22, hasn’t been perfect but has benefited communities by bringing forward good dollars for infrastructure projects.

He said rural municipalities want an agreement similar to the Calgary and Edmonton charters, where provincial dollars are tied to the province’s financial performance. It would mean slightly more funding in good times and slightly less in bad times.

“We can live with a reasonable reduction, but we don’t want to carry the whole weight of the economy,” Kemmere said.

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