Source URL: rmalberta.com/news/local-government-fiscal-framework-allocation-formula-released/

Local Government Fiscal Framework Allocation Formula Released

The formula determines how LGFF funding is distributed among all municipalities aside from Edmonton and Calgary

The Government of Alberta has released the allocation formula for the Local Government Fiscal Framework (LGFF). Beginning in the 2024 – 2025 fiscal year, the LGFF will replace the Municipal Sustainability Initiative (MSI) as the primary provincially-funded capital grant for municipalities.

The LGFF allocation formula is structured as follows:

  • Population: 65% weighting
  • Tangible capital assets: 15% weighting
  • Amortization of tangible capital assets: 10% weighting
  • Kilometres of local roads: 10% weighting
  • Base amount: $150,000 ($60,000 for summer villages)
  • Needs-based component: 3% of overall funding amount, allocated to municipalities with populations below 10,000 that have a limited local assessment base compared to their peers.

Allocation amounts for the 2024 – 2025 and 2025 – 2026 fiscal years are available. Note that the total LGFF fund will change annually at the same proportion as provincial revenues, based on a three-year lag. Total funding for all municipalities (including Edmonton and Calgary) is $722 million in 2024 -2025 and approximately $820 million in 2025 – 2026.

Members are encouraged to review the LGFF program guidelines for details, such as how to apply and eligible projects.

RMA Reaction

The RMA provided the Government of Alberta with a proposed allocation formula in late 2022, and discussions among the province, the RMA, and ABMunis continued throughout much of 2023. The final formula includes some components that align closely with the RMA’s approach, including the inclusion of amortization of tangible assets as a way to proxy maintenance costs for older assets, and an increased weighting of kilometres of local road in comparison to the MSI allocation formula.

The RMA is concerned with the high weighting of population in the formula, particularly as based on the RMA’s analysis, population is more strongly linked to operational costs than to capital costs for municipalities in Alberta. This high weighting will also reward high-residential growth municipalities that already can generate more own-source revenues and developer-contributed infrastructure, especially if, as projected, Alberta’s population growth continues to be concentrated in a relatively small number of communities. The RMA is concerned that the formula does not properly reflect current and future capital construction and maintenance costs that will face rural municipalities as they continue to host Alberta’s key industries, such as oil and gas, forestry, agriculture, and renewable energy.

Wyatt Skovron
Director of External Relations & Advocacy
780.955.4096
wyatt@RMAlberta.com