St. Albert’s upcoming capital funding challenge just got a whole lot tougher in the wake of a blue-ribbon panel’s report painting a stark picture of the province’s finances,
The MacKinnon report is unequivocal in its language: capital grants to municipalities account for a quarter of all provincial capital spending, and Alberta’s municipal capital grants are the highest in Canada and more than 20 per cent higher per capita than the national average.
“The province can’t afford to maintain existing levels of municipal capital support – levels that far exceed those of other provinces – and drive up provincial debt, while municipalities have tax room and yet rely on increasing provincial grants,” the report stated.
It recommended the province require municipalities to cover more of the cost for capital projects.
While both Alberta's and St. Albert's budgets are still weeks away from being tabled, the report is an ominous portend of the future of municipal capital funding in Alberta. The major capital funding program for municipalities, called the Municipal Sustainability Initiative, accounts for 51 per cent of the funding for capital projects in St. Albert, city financial services director Diane McMordie told the Gazette last year. The program has an end date that’s fast approaching and no replacement in sight.
We knew in October of last year that the city’s 2020 budget session would require some hard decisions. When the draft 2019 budget was released, it showed a $3.2-million funding shortfall in 2020 for the repair, maintenance and replacement (often referred to as RMR) of city assets – and no funding available for new capital projects.
Even then, the city was expecting the money it receives each year in capital grants to take a nosedive. Councillors shored up the 2020 budget by deferring $6 million from 2019.
Since then, the city has been grappling with a capital budget it cannot afford. Councillors slashed $128 million from their 10-year growth capital plan and approved a 1.5-per-cent tax increase for the next three years to help reduce its reliance on grants for RMR. But while these measures may help to mitigate funding shortfalls, they are not enough to surmount the coming challenges entirely.
Last week, Mayor Cathy Heron told the Gazette the city will need to watch what it spends, while Coun. Ken MacKay said he expected a “tough, tough budget year” ahead.
It is good to see councillors being realistic about the pressures they will face in the coming months. We will find out in October what the city’s budget holds, but in the meantime councillors will need to take a serious look at the tens of millions of dollars in capital projects earmarked for projects such as roads, transit and parks in 2020.
Tough decisions will go beyond capital spending, as well. Heron said the city will be looking at its asset management plan and increasing the lifecycle of city assets, and keeping a close eye on staffing levels. All that and more will be required in order for St. Albert to stave off high tax increases in the wake of an anticipated loss of provincial funding.
Alberta is getting its fiscal house in order, and it’s time St. Albert did the same. Councillors need to account for every dollar the city spends before they even think about tapping ratepayers on the shoulder for more money.