Cuts impact Alberta’s municipalities, SACPA told

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

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

The Southern Alberta Council on Public Affairs this week heard a presentation based on the Parkland Institute’s recent report on the impact of provincial cuts to Alberta municipalities.
Guest speaker was Jacqueline Peterson, an expert in municipal finance whose research focuses on multilevel governance, local finance and urban governance in both Canada and the U.S. who wrote the report called “An Unfair Deal? The Impact of Provincial Cuts on Alberta Municipalities.”
Peterson also also teaches urban politics at the University of Calgary and has a book being published next year by McGill-Queen’s University Press called “Multilevel Fiscal Institutions and the Politics of Funding Sustainable Urban Infrastructure.”
The Parkland report was made and released before the recent municipal election, she told SACPA, to help voters make informed decisions at the ballot box.
In her presentation, Peterson addressed how municipalities are impacted by lower provincial funding. She said the public may be unaware of the critical role the province plays in funding infrastructure in Alberta communities.
Things like flushing the toilet, having a shower, making coffee, driving or walking on a sidewalk and taking garbage out rely on infrastructure in our communities.
“These are all very day to day simple things that really define our lives and our quality of lives. They’re often things we just take for granted but these are really distinctly municipal local services and municipal infrastructure that we use on a day to day basis. We also of course use provincial and federal services,” Peterson said.
“Cities matter, municipal elections matter and the outcomes of these elections have a fairly direct and meaningful consequences on our everyday lives, on the quality and breadth of city services, our tax rates, local jobs, local economy. You know, truly what the future of our cities will look like. But these municipal decisions aren’t made by local councils alone, so in fact provincial policy has a direct and very meaningful impact on the options available to local governments. And while many people recognize that your local city councils and mayors may have (influence) on the changes you see in your cities, I would say much of the public is generally unaware of the critical roles played by the province” in these decisions, she said.
In her talk, she went over key findings of her report.
“Over the past spring and summer of this year, I interviewed municipal leaders across Alberta, councillors, mayors, city employees of cities and towns of all different sizes on the specific impact provincial policy has on their communities, focusing particularly on the provincial impact on local finances,” Peterson said.
“This can really take two forms: the province impacts municipal finances through grants and transfer programs, essentially by the payments it sends to municipalities. But the province also impacts municipal finance because it sets the rules on local taxes, fines, revenues, how cities can generate revenue. The rules by which cities can generate revenue are essentially set by the province and there was a really clear message that was reiterated over and over throughout these interviews and that is that specifically over the past few years, cities, towns, rural municipalities across Alberta have really been squeezed which has reduced several sources of revenue the cities and towns have traditionally relied upon.”
And this 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.
The capital funding includes money for infrastructure and physical assets such as sewers, bridges, water treatment plants, firehalls, buses and interchanges.
“These expenses are paid for by a mix of inter-governmental grants, developer levies and also cities’ own source of revenue 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 clearing, she said.
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 decreases in infrastructure funding to Alberta’s municipalities over the next several years. So the municipal sustainability initiative, MSI, is the province’s largest capital grant program to municipalities. Municipalities have really relied extensively on this fund over the past several years. It was originally conceived as a 10-year $11.3 billion program,” she said.
“However, in the latest budget, the MSI program is not only being cut by $330 million but the funding is also being drawn out two years longer than was originally anticipated, she said.
She likened it to a parent telling a child whose weekly allowance of $20 is being cut to $18 and instead of it being handed out on Friday, it will be given out the next week.
“Under the previous government, the NDP government, the MSI was set to be replaced in 2022 with the City Charter Fiscal Framework and this was an agreement between the province and its two largest cities, Calgary and Edmonton,” she said.
That framework included a revenue sharing component and while it was finalized in 2018, discussions actually began under a previous PC government, she said.
“So the need for such an arrangement and rethinking municipal revenue sources has been really on the government’s radar for a long time, she said.
In 2019, the UCP shelved the City Charter Framework and replaced it instead with what they call the Local Government Fiscal Framework which is now set to begin in 2024, according to Peterson.
This framework provides cities with a lower base funding down from $860 million to $722 million and also reduces the revenue sharing component, Peterson said.
“Right now when cities are getting squeezed on the infrastructure front, of course their priorities are for their immediate concerns. So fixing infrastructure, doing significant repairs on the infrastructure that is already there and they have less capacity to be thinking about the infrastructure that they need to be making as a future investment. The infrastructure that’s going to help attract talent, families, investment to municipalites and the investments that let cities grow more sustainably and more thoughtfully because these benefits will really be realized further down the road.
“And it’s these type of investments I personally worry the most about especially as we try to attract residents that can literally live anywhere in the world,” Peterson said.
She said the province has also taken other measures that impact local operating revenue – revenues cities rely on to provide daily services.
One of the policy changes that was “highlighted in my interviews were decreases in the municipality share of police fine revenue. So when ever you get a ticket or pay a fine to the police, this revenue is actually shared between the province and municipalities. In the past, municipalities used to retain 73 per cent of fine revenue. This has now decreased to 60 per cent which has resulted in net loss of $37 million.
“Typically this money has been earmarked for police budgets so municipal police forces are feeling especially pinched having to face deeper cuts as a result of these policy decisions,” she said.

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