Municipalities want grants restored as Alberta tracks towards surplus

Urban and rural municipalities are telling the Alberta government to restore past funding cuts now that the provincial budget is projected to end the year with a surplus. 

The cuts include a reduction of grants for municipal taxes on provincial properties, an elimination of grants for housing management bodies, a lower portion of traffic fines, and charge backs for the provincial part of RCMP biological casework analysis. 

The province is on track to end the fiscal year in the black. The surplus was $5.5 billion in the last quarterly update at the end of November. 

The government provides grants to pay the property taxes for provincially owned buildings within municipalities. The province has not reversed reductions made in 2019 and 2020 that only give municipalities about half of what the province would pay in taxes. 

Michael Janz, councillor for Ward papastew in Edmonton, said the province has shorted the city $60 million since the cuts were introduced. As the provincial capital, Edmonton has 60 per cent of provincial properties. 

Janz said the shortfall means the province isn't paying for its full share of city services such as police, firefighting, and garbage collection. He said the money could pay for maintenance, roads, grants for community groups, rinks and parks. 

"The provincial government should pay for the expenses that their buildings incur whether the building is built in Grand Prairie or Calgary or Edmonton," he said. 

"If it's a government building and it requires municipal services, the municipality hosting that building should be compensated for those services."

Municipalities are also unhappy about the amount they are getting under the new Local Government Fiscal Framework (LGFF), which is replacing the Municipality Sustainability Initiative (MSI) this year.

Municipalities are receiving $722 million under the fund, about $1 billion less than what Alberta Municipalities say its members require. 

'All Albertans are going to start to feel that'

Tyler Gandam, president of Alberta Municipalities and mayor of the City of Wetaskiwin, said the grant cuts have real impacts on cities and towns.

"They still cost our municipality in terms of services we provide: snow-clearing, RCMP, fire," he said.

"If we're not getting the funding back from the province for that through grants, then it goes back to whether or not we decrease our level of service or if we increase our property taxes for our residents to make up for that shortcoming."

Scott Johnston, press secretary for Municipal Affairs Minister Ric McIver, did not address the grants issue in a written response to questions from CBC News. 

Instead, Johnston focused on answering questions on the LGFF, which he said was introduced in response to requests from municipalities for more predictable funding.

He said the LGFF will be $722 million in 2024 and increase to $820 million in 2025. 

Counties and municipal districts represented by the Rural Municipalities of Alberta also want a restoration of grants in lieu of taxes, which they used to receive for public housing. 

The provincial government removed those grants in 2015. RMA estimates municipalities have lost $16 million in revenue every year since then. 

RMA president Paul McLauchlin provincial cuts are forcing more municipalities to raise taxes to meet their needs.

"That roughly billion dollar cut of the money that should be committed to municipalities, all Albertans are going to start to feel that," he said. 

"And I think it's important to recognize that sustainability of municipalities will continue to be a threat if we do not find a way to flow some money back into these communities that are contributing to GDP. "

The provincial government will table its 2024-25 budget on Feb. 29.