It has been a tough two weeks for Albertans.
At least it is if you believe the talk we hear circulating is that a lot of people are concerned about the future, regardless of whether it is the result of the federal election or people who are afraid they can be negatively impacted due to the cuts made in the provincial budget.
For the moment we will bypass the federal election results and concentrate on the provincial budget impact on municipalities.
Municipalities have been waiting anxiously for the newly elected United Conservative Party’s first budget. And to be blunt, they were worried. At least the municipalities in our readership area were. And by looking at the numbers, it seems their worry was justified.
Their biggest concern was whether the province would reduce or even eliminate the Municipal Sustainability Initiative (MSI) grant.
The Municipal Sustainability Initiative (MSI) program is a grant program, created in 2007, that sees the province give money to municipalities to fund infrastructure projects.
The good news is that the provincial government is sustaining the funding commitment the previous government made to municipalities for the 2019-20 year but will introduce reductions starting in 2020-21.
The bad news is that funding for the program will be reduced by $94 million and in 2020-21. In 2022, the reduction will reach $142 million. Municipalities will also no longer receive grants in place of property taxes on crown land or property.
The other big item in the budget that doesn’t seem to have gotten a lot of notice from the media is that the province expects to collect $2.5 billion from the school requisition tax in 2019-20. An increase of $14 million over the previous year. The boost in revenue will come from deducting an estimated $30 million from the Provincial Education Requisition Program (PERC) and the Shallow Gas Tax Relief Initiative (SGTRI).
PERC is a program that allows a municipality to write off its tax arrears from oil and gas companies. The SGTRI is an initiative by the province to lower the tax burden for shallow natural gas producers by requesting municipalities to lower the property taxes on qualifying producers by 35 per cent.
However, if you believe Calgary mayor Naheed Nenshi all the changes amount to an increase to one per cent in the education requisition adding an extra $15 million to the amount they will have to collect on behalf of the province. Of course, not all municipalities will have to collect as much as Calgary, but any increase in the requisition will hurt municipalities.
Unfortunately, many oil and gas companies are defaulting on paying their taxes, which means the municipalities are on the hook for the education portion. Yes, they do get some relief from PERC, but only if they write off the debt.
So it looks like municipalities are going to be in tough for the foreseeable future.