NDP sounds alarm over MSI funds

By Lethbridge Herald on February 23, 2020.

Herald photo by Ian Martens - Finance Criitic and Lethbridge West MLA Shannon Phillips, seated between Mayor Chris Spearman and Lethbridge East MLA Nathan Neudorf, speaks during a forum hosted by the Lethbridge Chamber of Commerce and Economic Development Lethbridge Friday at the Sandman Signature Hotel. @IMartensHerald

Nick Kuhl
Lethbridge Herald
nkuhl@lethbridgeherald.com
Alberta has the best-funded model of provincial to municipality transfers in the country.
Both the governing party and the opposition party agree on that point.
But residents across the province could be facing a decrease of municipal services, an increase to municipal property taxes, an increase of user fees for municipal services — or some combination of the three.
That’s if continued cuts to the Municipal Sustainability Initiative (MSI) and Grants in Place of Taxes (GIPOT) are made by the UCP government, say the NDP.
In documents prepared by and set to be released today by the opposition NDP, obtained by The Herald, it is claimed that the City of Lethbridge could be facing large reductions to its funding allocations.
The NDP says it estimates that in four years the City will be down $7,967,141.49.
Alberta’s Ministry Municipal Affairs says the MSI budget has been reduced by nine per cent over the final three years of the program (2019-20, 2020-21, 2021-22) to reflect the fiscal realities the province is facing. They also say 2020 allocations will be available following the announcement of Budget 2020 on Thursday.
City of Lethbridge officials say their current projections and estimations in place “are based on the information which was provided to us by the Provincial Government in their October 2019 budget and our own budgeting estimates,” which amount to about $5.5 million by 2021.
That speculated nearly $8-million number from the NDP would work out to $78.51 per person, or about $314 per family of four, based on the city’s 2019 population of 101,482.
Shannon Phillips, MLA for Lethbridge West and Official Opposition Critic for Treasury Board and Finance, said the 2019-2022 projected numbers were all calculated using statistics recovered from Government of Alberta documents, including the Fiscal Plan 2019-23 as well as cited reports at http://www.municipalaffairs.alberta.ca and open.alberta.ca.
They compare the yearly amounts being given to municipalities by the Government of Alberta to the amounts given to each municipality in 2018 by the previous government. She says no population or inflation escalators have been used.
“Here are the numbers, here are the facts,” Phillips told The Herald.
“We know that the government will dispute black and white numbers on the page. What we see here are a number of significant cuts to municipalities — the City of Lethbridge and Lethbridge County and surrounding areas. Based on what we know already, this is going to cost between hundreds of dollars per year per family to over thousands of dollars per year per family, depending on where.”
MSI is a program that grants funds to municipalities largely for the purposes of building or rehabilitating infrastructure, including roads and bridges, water systems, transit facilities and recreation facilities.
GIPOT allows the Province to pay municipalities for the property taxes that would have been assessed on provincially-owned assets if those assets weren’t tax exempt on account of them being owned by the province.
Municipal Affairs says the GIPOT program will see a reduction in funding over the next two years.
For 2019-20, most applications will be paid at approximately 75 per cent of the requested amount. For 2020-21 and future years, it is anticipated most applications will be paid at approximately 50 per cent of the requested amount.
The City of Lethbridge received $1,022,993 in GIPOT in 2018-19 and $802,246 in 2019-20. Based on the planned reduction in 2020-21, and accounting for expected assessment and tax increases, the City is expected to receive about $585,800.
The combined MSI and GIPOT $7.9-million NDP number is based on its projections of:
-Total Difference in Funding, 2018 vs. 2020: $1,586,391.50
-Total Difference in Funding, 2018 vs. 2021: $2,818,487.50
-Total Difference in Funding, 2018 vs. 2022: $3,574,059.49
“We understand there are many variables that go into these estimations including outside economic factors which can always change the final financial realities,” City of Lethbridge officials told The Herald.
“We have estimated based on the information we have, to see a reduction of around $2 million in MSI capital in 2020 and a reduction of $3 million in 2021. With the Grants in Place of Taxes (GIPOT) funding, we estimate to see a reduction of around $520,000 in 2020 and the same in 2021. While not a surprising outcome based on the findings of the MacKinnon Report, it is an adjustment and one we’ve taken in stride and were prepared for moving forward.”
“The modest fiscal restraint we’ve brought in for MSI grants and grants in lieu of taxes come nowhere near the figures MLA Phillips is suggesting,” Tim Gerwing, Municipal Affairs Spokesperson, told The Herald.
“When you see this type of exaggeration, it demonstrates that the NDP would rather distort the truth than face their record of racking up $60 billion of debt in just four years.”
“The government says this is about the debt,” Phillips said.
“Debt’s the same. The government says this is about the deficit. Their deficit is $2 billion more than Rachel Notley’s projected deficit for this year. None of those claims are correct or factual,” she continued.
“The City is going to have to deal with this hole. Jason Kenney has blown a hole in their budget. It will be up to them to make those decisions. We will see in many municipalities, there is no way around increasing property taxes more than they otherwise would have. There is no way around a number of City costs. They are being handed a number of fiscal challenges.”
The UCP countered by saying “short-term funding reductions will pay dividends down the road for municipalities, and for all Albertans. Municipalities will directly share in the benefits of our efforts when the new funding model in the Local Government Fiscal Framework begins in 2022-23.”
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