Members’ key issues raised ahead of Budget 2025 

The Government of Alberta is set to introduce its Budget 2025 at the end of February – just over a month from now. That’s why we wanted to outline what Alberta Municipalities has done to ensure the provincial government considers our members’ needs and valid concerns as it decides how to allocate funding to municipalities in the year ahead.

The association brought five key issues to the attention of Alberta’s Minister of Finance in mid-September 2024 as the provincial government prepared its annual budget. Specifically, we asked Minister Horner to share the Government of Alberta’s vision on the following topics:

• Provincial funding for community infrastructure
• Grants in Place of Taxes (GIPOT)
• Affordable housing
• Provincial property taxes
• Pricing of loans to municipalities for community infrastructure

One of these issues, loan pricing, was addressed in late September 2024 at our annual Convention and Trade Show. Premier Danielle Smith announced that the Government of Alberta would soon revert to its former policy on how interest rates are set for provincial loans to municipalities during her address to delegates on September 27. Beginning April 1, 2025, the provincial government will drop the interest rate on these loans by about 0.5 per cent. This move is expected to save municipalities millions of dollars a year.

More provincial funding needed for local infrastructure

With the provincial government’s introduction of a new Local Growth and Sustainability Grant (LGSG), the one-time grant will invest about $45 million in Alberta’s fastest growing cities to help them address their infrastructure needs. Another $15 million is reserved to support small communities who experience a critical breakdown in infrastructure. This additional funding is appreciated, but considerably more funding is needed to address the province’s difficult growth challenges. The Local Government Fiscal Framework (LGFF), with its inadequate base funding for capital projects, is unable to address Alberta’s multi-billion dollar infrastructure deficit.  

If more provincial funding for local infrastructure is not provided, municipal councils will face one of two difficult choices – either significantly increase property taxes on Albertans, or delay the replacement and building of community roads, transit, water and wastewater systems, recreation centres, and other facilities that Albertans use each day.

In our letter, we asked the Minister of Finance to outline how the provincial government intends to help fund local infrastructure so that Alberta’s reputation as an attractive province in which to live and work remains intact.

Grants in Place of Taxes (GIPOT)

Property owned by the Government of Alberta such as schools, hospitals, courthouses, seniors housing and related properties is exempt from property taxes. Recognizing that municipalities must provide infrastructure and services to these properties, the provincial government compensates municipalities each year through its Grants in Place of Taxes (GIPOT) program. Cuts made to the program in 2019 drastically affected many municipalities and placed an unfair financial burden on Albertans who live in municipalities in which provincial facilities exist.

We asked the provincial government to restore GIPOT funding to cover the costs of municipal services to provincial buildings. More than a dozen members have joined us in this call by sharing the impact the cut to GIPOT is having on their communities with Premier Smith.

Affordable housing

More Albertans than ever are considered unhoused, and local governments are doing what they can to address homelessness and the urgent need for affordable housing in their communities. Alberta Municipalities asked for an opportunity to discuss the provincial government’s plan for affordable housing so we can provide an update to our members and help them plan their communities’ futures.

Provincial property taxes

The Government of Alberta increased provincial property taxes by 9.2 per cent in Budget 2024. An additional increase of 4.5 per cent is forecasted for 2025-26. These provincial tax increases are communicated to Albertans through their local property tax bills and are often mistakenly attributed to decisions by their local council, not the provincial government. When residents see property taxes going up, they tend to direct their concerns and frustration towards local government officials even though a substantial portion of every property tax bill is a provincial tax.

Provincial legislation requires municipalities to balance their budgets and not run deficits. We said it is unreasonable to expect local governments to balance their budgets when municipalities’ annual costs keep going up and additional provincial funding cuts are frequently introduced.

We asked for an opportunity to work with the ministries of Treasury Board and Finance and Municipal Affairs to review how provincial property taxes could be changed so municipal councils have adequate funding to deliver the services for which municipalities are responsible.