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.
The solution to the municipal funding issue is simple: funding for municipalities must be sufficient to meet their current and future needs for the services they provide and the infrastructure they build for Albertans.
The RMA is seeking the support of all parties in ensuring that the LGFF is funded at a rate that is consistent with historical MSI funding. In particular, LGFF funding should be maintained at the same portion of overall provincial expenditures as the MSI program during its first year in 2010, which is 2.75%. Based on 2021 provincial expenditures, this would place initial LGFF funding at $1.77 billion.
