Despite their importance in providing crucial services and infrastructure, municipalities have limited funding sources, with municipal property taxes being the most significant. However, property taxes alone are not sufficient for municipalities to fulfill their delegated responsibilities, which is where provincial grant funding comes in. Grants help municipalities provide services like road construction and maintenance, water and wastewater, recreation, and others.
The main provincial grant program for municipalities is the Municipal Sustainability Initiative (MSI), which will be replaced by the Local Government Fiscal Framework (LGFF) in 2024 – 2025. The province has committed to an initial overall LGFF funding amount of $722 million. This represents a 37% drop in funding compared to the 10-year historical average of MSI. Over half of the $722 million will be split between Edmonton and Calgary, leaving just $340 million to be split among the approximately 330 other municipalities in the province. As municipalities are responsible for building and maintaining most of Alberta’s infrastructure, this amount will force some difficult decisions in terms of prioritizing capital construction and maintenance projects.