City council learned Monday night they would lose $620,000 in unconditional grant funding from the province.
According to chief financial officer Dean Screpnek, the city found out on March 12 that the province's Unconditional Municipal Grant Program was terminated, resulting in shortfall for St. Albert's 2010 budget.
Screpnek said the grant was used for operational purposes, with the city allowed to spend it on one or multiple projects, depending on what they needed that year.
"We decided to spend that money on transit and on Red Willow Park revitalization," Screpnek said. "There were no conditions or strings to that money."
About $440,000 went towards covering public transit, with the remainder going to trails.
Alberta Municipal Affairs spokesman Jerry Ward said the cuts were part of the province's larger challenge in dealing with a deficit. Ward added the province increased its Municipal Sustainability Initiative (MSI) grant, which he said could be used by the city to cover the missing funds.
The city will receive $12.2 million in MSI grants this year, doubling the amount received last year but significantly less than the $20 million the city was supposed to receive. The province announced late last year the grants would be spread over 12 years instead of the original 10.
While in theory the MSI funds could be used to replace the funding from the unconditional grant, Screpnek said reality is much different.
"In our budget, we already have spent that money," he said. "We wouldn't be able to do that."
Coun. Roger Lemieux said he wasn't surprised to hear about the grant being cut in light of the province's current financial situation, but hopes it won't lead to an extra property tax increase.
"I do not want to burden the taxpayers with an extra $700,000," Lemieux said. "Had we kept the money from the [2009] surplus, we wouldn't be in this mess."
Looking for options
Screpnek said his department was currently looking at potential ways to plug the gap in their grant funding. Some early ideas include using reserve funds or even simply deferring the decision until the end of the year to see if more revenue shows up elsewhere.
The larger challenge will come during deliberations for the city's 2011 budget, he said.
"In 2011 we will be down that money," said Screpnek. "It obviously puts pressure on the overall budget. Basically, we're just going to have to deal with it.
Darren Aldous, president of the Alberta Urban Municipalities Association, said he would like to see a different system of provincial funding in place, where each municipality gets a permanently set amount every year based on a particular formula.
"It would make things a little more stable," he said. "If there is a cut, then municipalities could plan for that a little more. We would all be riding the same wave."
