Municipalities concerned over infrastructure funding in the 2024 provincial budget
By Al Beeber - Lethbridge Herald on March 2, 2024.
LETHBRIDGE HERALDabeeber@lethbridgeherald.com The Alberta Municipalities organization has concerns about funding for infrastructure in the 2024 provincial budget.The organization represents municipalities where 85 per cent of Albertans live and its services are used by more than 300 of the province’s 334 municipalities.
Last fall Alberta Municipalities called on the province to increase funding by $1 billion to municipalities. That funding previously came from the Municipal Sustainability Initiative which has allocated more than $15.2 billion since being launched in 2007.
But this year, the MSI was replaced by the Local Government Fiscal Framework for which $722 million in capital funding is being provided in the budget for infrastructure in 2024.
Alberta Municipalities wanted that funding to start at $1.75 billion, media was told in a Zoom meeting on Friday.
“Provincial funding for community infrastructure has not kept pace with Alberta’s population growth, nor changes in inflation. In 2011, the Government of Alberta was investing $420 per Albertan into municipal infrastructure programs but that has trended downward over the years and will only be $186 per capita in 2024,” says ABMunis.
The organization says while it appears capital funding has significantly increased in 2024-25, in 2021-22 the UCP chose to front-load a large portion of the remaining three years of MSI Capital – at an average of $722 million per year which it says “resulted in abnormally low funding in 2022-23 and 2023-24 leading into this year where the province has maintained that level of funding with LGFF Capital set at the same annual average of $722 million. The total of $912 million includes the $722 million in LGFF Capital plus funding from five other programs.”
Education property tax is also a concern, media were told. In 2023, ABMunis recommended that the province’s education tax amount should be maintained at $2.5 billion.
But the province has instead opted to maintain education tax rates from 2023-24 and because of the growth in property assessments in communities last year, the government will collect $229 million more from Albertans through property tax bills.
ABMunis says this is a 9.2 increase on provincial education property taxes which will have to be collected by Alberta’s municipalities, putting more pressure on councils to collect that tax and address taxpayers concerns if taxes have to be raised even higher for municipal needs.
Rachel De Vos, chief policy and advocacy officer of ABMunis, said the organization wholeheartedly endorses Premier Danielle Smith’s vision in the strategic plan “that Albertans deserve to live, work and play in strong safe communities with unfettered access to world class services.
“At the same time, world class services requires serious commitment and significant investment. Provincial investment in municipal infrastructure seems detached from population growth and inflation,” said De Vos.
“Budget 2024-25 signals further downloading of the tax burden onto municipal governments and property taxpayers of Alberta. The government of Alberta has ignored ABMUnis call for the new Local Government Fiscal Framework (LGFF) program to start at $1.75 billion. Instead, it will start at only $722 million. This continues the trend of inadequate provincial investments in community infrastructure, being hundreds of millions of dollars below historical levels.
“When you consider changes in population and inflation, the situation for municipalities is even worse,” she said.
Inflation cuts into every municipalities purchasing power, De Vos added. If LGFF capital had been adjusted to account for inflation over the past three years, the starting amount should have been almost $100 million more this year at $819 million, De Vos added.
For example, the cost of replacing or building new sidewalks “has ballooned thanks to a 130 per cent increase in the cost of cement. This makes it challenging for municipalities to build the infrastructure required to support growth and the desperate need for housing,” De Vos added.
Community safety is a top priority for the province, members and Albertans but it’s becoming challenging to replace-life saving equipment, she said. The Town of Okotoks has found the price of a classic red fire engine has increased from about $800,000 in 2018 to $1.2 million this year, De Vos noted.
Growing communities are being squeezed by population increases, rising prices and existing infrastructure deficit, she added.
ABMunis’ disappointment with infrastructure funding is heightened by the increase in amount of education property taxes that the province will take from communities.
“Due to strong growth in property values and increased development over the past year, the government of Alberta will collect an additional $229 million” in 2024-25.
While the province says the revenue help mitigate the cost of rising enrolment in schools, said De Vos, the tax increase will far surpass the 4.7 per cent year over year change in Alberta Education’s budgeted expenditures.
ABMunis says Municipal Affairs’ business plan includes an objective to determine the feasibility of amending the Education Property Tax to assist municipalities in retaining more funding for local priorities, De Vos said.
“We welcome the opportunities to discuss potential amendments to the education property tax regime. In the meantime, the province should refrain from eating into the most important of the limited revenue options municipalities have,” De Vos added. 3
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