Ongoing infrastructure funding from the province remains the city's top uncertainty city officials said this week, but the recent provincial budget will increase funding for roads and bridges by nearly $500,000 this year.
“Overall, there [were] no major surprises to city administration in the 2023 budget,” city financial manager Anne Victoor said of the recent provincial budget, during the March 14 commttee meeting.
One key impact Premier Danielle Smith's first budget will have for St. Albert, Victoor said, is the city will receive an additional $492,000 from the province this year through increased funding allocated to the Municipal Sustainability Initiative (MSI).
The MSI program is set to be replaced next year by the Local Government Fiscal Framework (LGFF), which will also come with a new funding formula, although that formula has yet to be announced.
In 2021, the provincial government announced MSI funding for municipalities, used largely for road, water, and recreation infrastructure projects, would decrease substantially in 2022 and 2023 after the three-year funding for the program was front-loaded in 2021 to spur COVID-19 recovery.
In 2022 and 2023, the MSI program was funded to the tune of $485 million, while in 2021 the program's budget was $1.2 billion.
In the province's 2023-24 budget announced last month, which has yet to be passed by the legislative assembly, the LGFF funding level for 2024 is estimated to be $722 million, and $813 million in 2025.
“While this budget increases the (MSI) operating component, resulting in net new revenue of approximately $492,000 to the city, this does not offset the ongoing annual funding reductions of approximately $4.5 million the city continues to face,” Victoor said, referencing that overall MSI funding has yet to return to levels seen in 2020 and earlier.
In 2020, the MSI program had a budget of $963 million.
“The city relies heavily on this funding to support our existing infrastructure requirements, putting us in a difficult position as grants become less reliable and stable,” Victoor said.
Administration is planning to bring forward a few options for council to consider regarding how the $492,000 in additional funding is used, and Victoor said the options will focus on off-setting expenses in the 2023 budget.
Until the new LGFF funding formula is announced “there remains an element of uncertainty for the City of St. Albert," read a document prepared for council by administration.
“While the allocation formula for LGFF will be established in the months ahead, initial projections are forecasting no change to the 25 per cent reduction."
Coun. Ken MacKay told The Gazette city council has been advocating to the province for increased infrastructure funding for many years.
“We've advocated strongly for that funding base to be increased,” he said. “It looks like it will be a little bit, but it would be nice if it actually was a bigger pot to begin with.”
As a result of the unreliability of infrastructure funding from the province, Coun. Mike Killick said the city has had to plan accordingly, and pointed to council's decision to impose a 1.5 per cent tax increase per year for three years between 2019 and 2021.
“It's been clearly communicated by the provincial government those decreases we're going to be coming for the next couple of years, so we have factored that in,” Killick said.
Other budget impacts
Other impacts the proposed provincial budget will have on St. Albert identified by administration include approximately $20,000 in additional annual grant funding for the St. Albert Public Library, and a potential funding increase for Family and Community Support Services (FCSS), although by how much is currently unknown.
The backgrounder also states that the province's budget does not include increased grant funding for the Edmonton Metropolitan Region Board (EMRB) — which St. Albert pays into each year — despite the EMRB's advocacy efforts for increased funding.
The Gazette reported in January that the EMRB was considering an increase to the contributions paid by member municipalities, potentially raising St. Albert's annual contribution by as much as $30,000.
Another provincial budget impact identified by administration is that the city's overall education property tax requisition will be increased by 1.9 per cent.
“The education requisition accounts for approximately 25 per cent of a rate payer's property tax bill,” the backgrounder says.
In 2022, just over $36 million was levied against St. Albert property owners specifically for the education property tax.
Previous coverage of the provincial budget can be found on The Gazette's website.
