Cuts Impacting Municipalities In Alberta, SACPA Says


By Al Beeber – Lethbridge Herald on December 4, 2021.

LETHBRIDGE HERALD[email protected]

The Southern Alberta Council on Public Affairs this week heard a presentation based on the recent Parkland Institute report on the impact of provincial cuts on municipalities in Alberta.
The guest speaker was Jacqueline Peterson, a municipal finance expert whose research focuses on multilevel governance, local finance and urban governance in Canada and the United States who wrote the report titled “An Unfair Deal? The impact of provincial cuts on municipalities in Alberta.
Peterson also teaches urban policy at the University of Calgary and next year published a book by McGill-Queen’s University Press entitled “Multilevel Fiscal Institutions and the Politics of Funding Sustainable Urban Infrastructure”.
The Parkland Report was written and released ahead of the recent municipal election, she told SACPA, to help voters make informed decisions at the ballot box.
In his presentation, Peterson explained how municipalities are affected by declining provincial funding. She said the public may not be aware of the critical role the province plays in funding infrastructure in communities across Alberta.
Things like flushing the toilet, showering, making coffee, driving or walking on a sidewalk and taking out the garbage depend on the infrastructure of our communities.
“These are all simple, everyday things that really define our lives and our quality of life. These are often things we take for granted, but they are truly separate local services and municipal infrastructure that we use on a daily basis. Of course, we also use provincial and federal services, ”said Peterson.
“Cities count, municipal elections count and the results of these elections have quite direct and significant consequences on our daily life, on the quality and extent of municipal services, our tax rates, local jobs, local economy. You know, really what the future of our cities will look like. But these municipal decisions are not made by local councils alone, so in fact provincial politics has a direct and very significant impact on the options available to local governments. And while a lot of people recognize that your city councils and local mayors can have (an influence) on the changes that you see in your cities, I would say that a large part of the public is generally not aware of the critical roles played by the province “in those decisions, she mentioned.
In her speech, she reviewed the main findings of her report.
“During the last spring and summer of this year, I interviewed city leaders from across Alberta, councilors, mayors, city workers from cities of all sizes on the specific impact of the policy. provincial impact on their communities, with a particular focus on the provincial impact on local finances, ”said Peterson.
“It can really take two forms: the province impacts municipal finances through grant and transfer programs, essentially through payments it sends to municipalities. But the province also has an impact on municipal finances as it sets the rules on local taxes, fines, revenue, how cities can generate revenue. The rules by which cities can generate income are essentially set by the province and a very clear message was reiterated over and over again throughout these interviews, namely that in recent years, cities, towns and villages rural Alberta has really been squeezed, which has reduced many sources of revenue that cities and towns have traditionally relied on.
And that has implications, she said, for local infrastructure, what cities can build as well as local services and day-to-day operations, Peterson said.
Provincial transfers to Lethbridge in 2019 included $ 20.9 million for capital budgets and $ 15.4 million for operating budgets.
Capital funding includes funds for infrastructure and physical assets such as sewers, bridges, water treatment plants, fire stations, buses and interchanges.
“These expenses are paid for by a mix of intergovernmental grants, developer taxes and also from the cities own source of income like tax revenue,” she said.
Operating budgets, she said, are the programs and services that municipalities provide on a daily basis, such as fire and police response, 311 services, basic road maintenance and snow removal, she declared.
Of all the transfers that were sent to the City of Lethbridge in 2019, the majority were for capital expenditures.
“The most recent 2021 provincial budget outlines some significant cuts to infrastructure funding for municipalities in Alberta over the next several years. For example, the municipal sustainability initiative, MSI, is the province’s largest capital grant program to municipalities. Municipalities have relied heavily on this fund in recent years. It was originally designed as a 10-year, $ 11.3 billion program, ”she said.
“However, in the last budget, the MSI program is not only cut by $ 330 million, but the funding is also extended by two more years than originally planned,” she said.
She compared it to a parent telling a child whose weekly allowance of $ 20 is reduced to $ 18 and instead of being handed out on Friday, it will be distributed next week.
“Under the previous government, the NDP government, the MSI was to be replaced in 2022 by the City Charter Fiscal Framework and it was an agreement between the province and its two largest cities, Calgary and Edmonton,” he said. she declared.
This framework included a revenue sharing component and, although it was finalized in 2018, discussions actually started under a previous PC government, she said.
“So the need for such an arrangement and rethinking municipal revenue sources has really been on the government’s radar for a long time,” she said.
In 2019, the UCP put aside the City Charter Framework and replaced it instead with what they call the Local Government Fiscal Framework, which is now slated to begin in 2024, according to Peterson.
That framework provides cities with base funding that is $ 860 million to $ 722 million lower and also reduces the revenue-sharing component, Peterson said.
“Right now, when cities are in a hurry on the infrastructure front, their priorities are of course their immediate concerns. So fix the infrastructure, do major repairs on the infrastructure that’s already there, and they have less ability to think about the infrastructure they need to make as a future investment. The infrastructure that will help attract talent, families, investments in municipalities and investments that will allow cities to develop in a more sustainable and thoughtful way, because these benefits will actually materialize later.
“And it’s these types of investments that I’m most concerned about personally, especially as we’re trying to attract residents who can literally live anywhere in the world,” Peterson said.
She said the province has also taken other measures that impact local operating revenues – the revenues that cities rely on to provide daily services.
One of the policy changes that was “highlighted in my interviews was the declining share of municipalities in police fine revenue. So every time you get a ticket or pay the police a fine, that revenue is actually shared between the province and the municipalities. In the past, municipalities kept 73 percent of fine revenue. That figure has now grown to 60 percent, resulting in a net loss of $ 37 million.
“Usually this money has been earmarked for police budgets, so municipal police forces feel particularly affected to have to face larger cuts as a result of these policy decisions,” she said. .

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