Advocacy win: Lower interest rates for municipalities

Last week in Red Deer, Premier Smith announced that the Government of Alberta will soon revert to its former policy on how interest rates are set for provincial loans to local authorities.

Alberta Municipalities is very pleased with this announcement because this change is in direct response to our advocacy on this issue through a resolution members passed in September 2023.

Prior to 2021, the Government of Alberta would lend capital funding to local authorities at the same rate the provincial government received when borrowing capital in the market. In December 2021, the Government of Alberta changed its policy and began setting loan rates for local authorities at a rate that would be similar to what a major city could access in the bond market. That decision increased the loan rates for municipalities by an average of 0.5 to 0.75 of one per cent, adding millions of dollars of costs to community infrastructure projects.

The provincial government’s decision to revert to the former policy will save municipalities – and property taxpayers – millions of dollars to build infrastructure projects in communities across Alberta. This was our ultimate goal and we are pleased that our conversations with Premier Danielle Smith, President of Treasury Board and Minister of Finance Nate Horner, and Minister of Municipal Affairs Ric McIver resulted in this decision.  

The new policy will apply to new loans taken out after April 1, 2025. To learn more, view the Government of Alberta’s news release.