By Rob Vogt – Local Press Writer
The provincial government is changing the way it funds municipalities, and Claresholm town council had their first real look at what the new formula may look like.
At its Dec. 12 meeting, council reviewed a report from administration explaining the Municipal Sustainability Initiative, or MSI, was launched in 2007 to provide both operational and capital funding for municipalities. After a number of extensions and reductions in MSI funding over the last few years, the MSI program is ending, with 2023 being the final year of MSI funding.
The Local Government Fiscal Framework, or LGFF, is the Alberta Government’s new program to replace MSI and is Alberta’s primary infrastructure funding program for municipal governments. The Local Government Fiscal Framework Act only provides for capital funding and does not legislate any operational funding in the LGFF to replace the operational MSI funding we currently receive. That being said, there has been indication there will be some operational funding provided as well, but without any legislation, this it leaves a lot of uncertainty around the operational funding.
The LGFF Act indicates the total capital funding for the 2023-2024 fiscal year, $382 million to Calgary and Edmonton, and $340 million to everyone else. Funding for future years will be adjusted based on changes in the Government of Alberta’s revenue. The Act however does not indicate how the $340M funding to municipalities is to be allocated across the municipalities excluding Calgary and Edmonton.
It was noted, this is a fairly significant cut in funding compared to MSI historical funding.
The final three years of MSI funding were supposed to be just for 2021 and 2022, however due to delays in the LGFF framework being rolled out, the Alberta Government adjusted that 2021 and 2022 allocations to be distributed over three years – 2021, 2022 and 2023 – with no additional funding for the additional year. This funding was front-loaded, providing more funding in 2021, with significant reduction in funding for 2022 and 2023. LGFF funding is greater than the town received, or are receiving, in 2022 and 2023, but a significant reduction from earlier years, that is a 33 per cent reduction from the 12-year average of MSI.
The Alberta government has asked for input on how these funds should be allocated amongst the municipalities, other than Calgary and Edmonton. In May of 2022, Alberta Municipal Affairs asked Alberta Municipalities, formerly known as the Alberta Urban Municipalities Association, and the Rural Municipalities of Alberta to work together to design a formula to allocate LGFF for the municipalities other than Calgary and Edmonton. Within this, the ministry of municipal affairs set guidelines that it must be designed to meet three key objectives:
• Maximize transparency, comprehensibility, predictability, and equity;
• Prioritize municipal asset management and resiliency of community infrastructure;
• Consider municipalities with the greatest needs.
Abe Tinney, the town’s chief administrative officer, explained Alberta Municipalities has developed a proposed formula, but is still working out options.
He noted the LGFF framework is going to be a significant change from the current MSI funding – not least of which is the significant reduction in the amount of funding.
The benefit, Tinney said, is it provides consistency moving forward.
However, there are still questions about what the formula will look like.
Coun. Rod Kettles said there was not much to discuss until council sees the actual formula.
By Rob Vogt – Local Press Writer