Municipalities will take a hit to their infrastructure funding over the coming years, as well as to operational funding they receive from the province.
On Thursday, the provincial government tabled its 2019-20 budget. The budget includes cuts to operating funding of six per cent over four years, as well as cuts to a core capital program beginning next year and cuts to money municipalities receive in lieu of taxes for crown properties.
The Municipal Sustainability Initiative (MSI) program is a grant program that sees the province give money to municipalities to fund infrastructure projects. The provincial government is sustaining the funding commitment the previous government made to municipalities for the 2019-20 year but will introduce reductions starting in 2020-21.
In 2020-21, the funding for the program will be reduced by $94 million and in 2021-22 the reduction will be $142 million – an overall reduction of $236 million, or nine per cent.
The province is also scrapping a deal the former NDP government made to provide core funding to Edmonton and Calgary once the MSI program ends. Instead, the UCP plans to introduce legislation for a new Local Government Fiscal Framework, which will apply to all municipalities.
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The new framework means municipalities will split a pot of $860 million starting in 2022-23, with Edmonton and Calgary receiving just over half of that. The pot of money will be adjusted each year to reflect half the percentage change in provincial revenues. For example, if provincial revenues rise by four per cent, the municipal funding will increase by two per cent. If provincial revenues drop by four per cent, municipal funding will drop by two per cent.
Capital grants will also be based on population estimates as of 2020-21, rather than on most recent census data.
Legislation for the new program has yet to be introduced and will include further details about how the numbers will be calculated.
Crown land grants cut by 50 per cent
Overall, the Ministry of Municipal Affairs will be reduced by nine per cent, with the majority of the saving coming from a 50-per-cent reduction to grants the province gives in lieu of taxes for crown lands.
The province is reducing those grants by 25 per cent this year and a further 25 per cent next year, which will allow the ministry to save $81 million.
Under that program, St. Albert received $150,000 in 2018-19.
That amount will drop to $116,000 in 2019-20 and to $77,000 in 2020-21.
Overall, provincial funding to municipalities will be $1.2 billion in 2019-20, which is $208 million lower than in 2018-19, primarily due to the winding down of the GreenTRIP capital grant program.
The changes will lower the per-capita funding levels to municipalities, and Budget 2019-20 notes it will bring the numbers in line with other provincial averages.
Library service grants will be maintained at the same levels as last year’s budget, along with the Family and Community Support Services (FCSS) grants. Policing grants are being maintained and will be informed by a review by the Justice and Solicitor General.