Advocacy on Financial Measures
IT IS THEREFORE RESOLVED THAT the Alberta Urban Municipalities Association continue to advocate to the Government of Alberta for municipal finance reform, including:
- The expansion of revenue tools to reduce reliance on property taxes as opportunities allow;
- The expansion of property tax flexibility as opportunities allow;
- The expansion of revenue tools to non-property related activities as opportunities allow;
- The development of non-residential property sub-classes that are efficient and easily administered to allow municipalities a tool for targeted financial relief;
AND FURTHER BE IT RESOLVED THAT to support our advocacy, the AUMA, in collaboration with Alberta’s municipalities, and if possible, the Government of Alberta undertake research studies and/or collect information on:
- The impact of e-commerce and the new models of goods and services delivery on municipal economies and finances; and
- Identifying a comprehensive list of services and associated costs redirected to municipalities.
WHEREAS Alberta’s municipalities have long advocated for long-term, stable, predictable and appropriate funding in order to remain financially viable and continue to provide the services and infrastructure needed by our citizens;
WHEREAS the AUMA in 2020 passed a resolution, submitted by the City of Edmonton, advocating for the Government of Alberta to reshape municipal finance for a new time and provide municipalities with reasonable measures and tools, and the responsibility that goes with them, to enable cities, towns, and villages to sustainably meet their operating and capital budget needs;
WHEREAS to support Calgary’s economic recovery and financial resiliency, Calgary City Council identified the need for a Financial Task Force with a mandate to identify and assess innovative solutions for short-term economic mitigation, long-term economic recovery, and revenue options to improve the City of Calgary’s financial resilience;
WHEREAS several of the Financial Task Force’s recommendations are of interest to all of Alberta’s municipalities in our on-going advocacy with the Government of Alberta on municipal financial reform;
WHEREAS the Financial Task Force recommended working with the Government of Alberta on municipal financial reform such as:
- Expansion of revenue tools;
- Property tax flexibility;
- Taxation of non-property related activity; and
- Non-residential sub-classes;
WHEREAS without changes to legislation, there is limited opportunity for change in these areas;
WHEREAS research and analysis are needed that documents the extent of the decline in bricks and mortar retail and the current transition to new models of goods and services delivery to demonstrate that municipalities’ traditional real estate tax revenues cannot capture the transition to e-commerce transactions.
To support Calgary’s economic recovery and financial resiliency, Calgary City Council identified the need for a Financial Task Force (FTF) with the mandate to identify and assess innovative solutions for short-term economic mitigation, long-term economic recovery, and revenue options for The City of Calgary’s financial resiliency. The FTF worked for nine months over 2019-2020 and made 35 recommendations, all of which were adopted by Calgary City Council in June 2020.
The City of Calgary sees alignment with AUMA’s advocacy on municipal finance reform, a policy that was adopted at the 2020 AUMA Convention, and several of the FTF’s recommendations. The proposed resolution directs the AUMA incorporate several of the FTF’s recommendations into AUMA municipal finance reform policy to help support our collective municipal advocacy towards the Government of Alberta. The resolution asks that the AUMA to include specific policies such as:
- Expansion of revenue tools – The revenue sources available to municipalities are restricted by provincial legislation and AUMA and Alberta’s municipalities have long advocated for the ability to use alternate revenue tools – if municipalities could improve the diversity and reliance on other, non-property tax revenue sources this would help create long-term, stable, predictable municipal funding and lessen the reliance of municipalities on property tax and the need for sustained property tax increases;
- Property tax flexibility – The ability to differentiate taxation for businesses and organizations that make significant contributions to the character and fabric of a municipality including organizations like Business Improvement Areas (BIAs), non-profit organizations and owner-operated small businesses with limited financial means;
- Taxation of non-property related activity – Our economy is everchanging with the rapidly growing e-commerce activity that is transforming behaviours within society and municipalities need the capacity to adjust and adapt to changing demands and uses on municipal infrastructure and on municipal economies;
- Non-residential sub-classes – Work with the Government of Alberta to expand the tools available for responses when tax circumstances that are unique to certain nonresidential taxpayer groups emerge and provide the capacity for targeted property tax relief because the current sub-class definition makes for a blunt tool for property tax relief; and
- Calls for the AUMA and municipalities to either do further research and analysis and/or collection information to document:
- The extent of the decline in bricks and mortar retail and the current transition to new models of goods and services delivery to demonstrate that municipalities’ traditional real estate tax revenues cannot capture the transition to e-commerce transactions; and
- A comprehensive list of services and associated costs redirected to municipalities by the Government of Alberta.
Adding these polices into AUMA’s advocacy on municipal finance reform would help support and focus AUMA’s and Alberta’s municipalities in their on-going advocacy and dialogue with the Government of Alberta. It would assist in helping our collective advocacy for the fiscal tools necessary to allow municipalities to continue to provide effective delivery of services into the future, and help Alberta’s municipalities towards meeting the challenges of a rapidly evolving economy and society.
A response from Municipal Affairs on March 15, 2022 stated:
“The province recognizes that municipalities, like all governments, are facing fiscal pressures; however, the Government of Alberta does not agree that the solution to these challenges is to create additional taxation tools. The province believes all governments need to look for ways to reduce red tape, incentivize economic activity, and make strategic choices about where limited tax dollars should be spent.
Municipalities are encouraged to continue exploring how legislative measures can help with achieving desired outcomes for economic development. Legislative mechanisms already exist to provide councils with the ability to address exceptional circumstances in a targeted way. For example, a council may reduce property taxes for specific properties if they believe it is equitable to do so using Section 347 of the Municipal Government Act. Alternatively, a council may choose to provide tax incentives for non-residential property under Section 364.2, which provides municipalities with the flexibility to define the incentive criteria locally.
The Municipal Government Act allows municipalities to tax property and apply special, offsite, and local improvement taxes for specific purposes. Broader consultation would be required before the province would be prepared to consider any expansion of municipal taxation powers.”
ABmunis’ Rating of the Government’s Response
Intent not met
ABmunis’ Notes and Actions
The Minister of Municipal Affairs responded to this resolution in March 2022 by acknowledging that “municipalities, like all governments, are facing fiscal pressures; however, the Government of Alberta does not agree that the solution to these challenges is to create additional taxation tools. The province believes that governments need to look for ways to reduce red tape, incentivize economic activity and make strategic choices about where limited tax dollars should be spent.”
ABmunis’ advocacy efforts have been successful in leading to the implementation of the Local Government Fiscal Framework (LGFF) wherein future funding amounts will be linked to changes in the Government of Alberta's revenue so that LGFF infrastructure funding will grow with Alberta’s economy over the long term.
In regard to provincial downloading, ABmunis released data in September 2023 that demonstrates that between 2017 and 2022, the Government of Alberta downloaded an estimated $384 million in operational costs onto municipalities by reducing grant funding or not indexing funding to inflation. It should be acknowledged that this figure does not account for all costs such as municipalities having to supplement provincial services such as emergency medical response and affordable housing.
Municipal revenue sources will continue to be a priority in ABmunis advocacy. In September 2024, ABmunis began a new year-long research project that will look at various finance issues including the impact of e-commerce on municipal revenues.