Panel recommends cuts in capital support for cities
Iveson urges government to stand by campaign promise to honour funding deal
The Mackinnon report released Tuesday levelled a blunt warning to municipalities across Alberta — the province can’t afford to maintain existing levels of capital support.
A panel headed by former Saskatchewan finance minister Janice Mackinnon issued a swath of recommendations around funding municipal projects, but they boil down to one thing: Towns and cities should shoulder more of the cost.
The panel assessing Alberta’s finances also urged a policy around selling off public lands as a revenue tool, and wrote against current funding formulas and the recent city charter agreements made with Edmonton and Calgary.
But Edmonton Mayor Don Iveson is calling on the government to stand by its election campaign promise of honouring these agreements notwithstanding the report findings.
“We understand the province is in difficult shape. That’s why we took a 42-per-cent cut to our infrastructure grant last year when we signed the charter deal, a deal which the government recognized in its campaign platform and said that it was going to continue to honour,” Iveson said Tuesday.
Edmonton is expected to receive $211 million in the first year of the $500-million agreement with the two cities starting in 2022-23 with funding fluctuating in future years depending on provincial revenues. These funds are intended to go toward general infrastructure and transit projects already in the works such as the Yellowhead Freeway conversion and LRT construction and Iveson said he is looking for assurance these dollars won’t be jeopardized.
“If those numbers were to change mid-infrastructure cycle that would be very, very difficult for us where we’ve already tendered projects over the four-year cycle,” he said. “I don’t have a sense that’s coming, but we’ll all have a lot more security when we actually see the budget.”
At the heart of the capital spending recommendations is a desire to rein in Alberta’s funding levels and bring them closer to those in other provinces.
“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 reads.
Requiring municipalities to saddle more major project costs is an issue that’s top-of-mind for Alberta municipalities, particularly given the pending 2021-22 expiration of the Municipal Sustainability Initiative (MSI) funding program.
Last year, the Alberta Urban Municipalities Association (AUMA) passed a resolution asking government to index annual funding as a fixed percentage of the province’s revenue.
The resolution cited a “shared responsibility” between the province and municipalities to fund infrastructure.
On Tuesday, AUMA spokesman Michael Hogan said the association is reviewing the report and will continue to advocate for a new municipal funding framework.
The Mackinnon report argued neither the charter nor the MSI allocate municipal capital grants “in line with provincial goals and priorities.”
SELLING PUBLIC LANDS
The government currently has 78 surplus properties in its inventory worth an estimated $133 million, but that doesn’t include land held by the broader public sector like health and education facilities.
The panel recommended the province redefine its inventory of land assets to include those properties, arguing land sales could provide revenue for the province and help offset the capital costs of new investments.
Land sales were a touchy subject last year for Premier Jason Kenney, after he floated a plan to sell off Crown land in Peace River Country to help plug Alberta’s economic hole.
It hearkened back to a similar program under former premier Ed Stelmach, in which 120,000 acres of Crown forest were auctioned off to the highest bidder, cleared, and turned into farm land.
Kenney’s proposal drew a swift rebuke from Indigenous groups, who threatened legal action if the plan went ahead, saying the UCP leader — like Stelmach — never consulted them.
PRIORITIZING THE GREATEST NEEDS
Mackinnon’s panel also recommended stabilizing Alberta’s Capital Maintenance and Renewal spending program, which is used to extend the life of assets and reduce operating costs.
The government should prioritize cash for areas with “the greatest need,” the panel wrote, and establish accountability and performance measures “so citizens have the ability to constructively evaluate their local government and their use of tax dollars.”
It also wants the province to make better use of the federal Investing in Canada Infrastructure Program, and establish a group to develop more effective procurement methods.
Finance Minister Travis Toews said his government would consider Mackinnon’s findings in its budget and fiscal plan deliberations, but stressed required infrastructure would still be built.
“We know building schools as enrolment growth climbs is important and it’s important to make sure our health-care system has adequate facilities,” he said. “We need to keep up with our roads and other infrastructure that will be vital to attract investment, create job opportunities and grow the economy.”
The government recently said a new 20-year strategic capital plan and an Infrastructure Act earmarked for the spring will be guided by the Mackinnon report.