Rural Municipalities of Alberta president Paul McLachlin anticipates municipalities will face a challenging financial year in 2023. (Photo from RMA Facebook)

Rural Municipalities of Alberta president Paul McLachlin anticipates municipalities will face a challenging financial year in 2023. (Photo from RMA Facebook)

Municipalities face fiscal challenges in 2023

Provincial downloading, recession, inflation and supply chain issues will have an impact

As Alberta’s municipalities head into 2023 they will be swimming against strong financial currents.

Rural Municipalities of Alberta president Paul McLachlin said if the economy sinks into recession, that combined with continued provincial downloading onto municipalities could make for some tense budgeting.

“Probably the biggest issue we’re dealing with across all municipalities is provincial download of responsibilities,” said McLachlin on Friday.

“In the last (provincial) budget, we received the largest sector hit. We had a 40 per cent decrease in our funding transfers from the provincial government.

The funding dollars that were supposed to move to us have been slowly degraded and has more impact on us. So, we want to be made whole again.”

Alberta municipalities, with their low populations and high infrastructure needs, oversee a bigger share of provincial assets than any province in the country, he said.

With a spring election looming, the RMA intends to ensure that its message that municipalities are carrying a big load and the province needs to provide more financial support.

“Probably about $800 million should be moved into municipal transfers if we’re to be made whole again. That’s a lot of money to municipalities that take care of all the roads and provide the infrastructure for all the industries that need to thrive in order to get us out of a recession.”

At the same time grants are being cut, municipalities are poised to face other financial pressures. Many economists are predicting Canada could fall into a recession in the early part of this year, although Alberta Finance Minister Travis Toews has said he remains confident Alberta will be spared.

“A Q1 and Q2 recession will definitely affect our operations,” said McLachlin.

“We also on top of that have a supply chain (issue) that will have a significant impact. So, you have a recession, you have inflation and then supply chain.

“We’re going to be looking at capital costs and operational costs anywhere from 10 to 20 per cent higher than what was budgeted for. We’re going to feel the pinch.”

On the positive side of the ledger, this year could be a significant year for municipalities that are owed millions in unpaid oil and gas taxes, he believes.

It is an issue that has been dragging on for four years, but McLachlin has expressed optimism the current government is willing to take the steps necessary to fix the loopholes that have allowed energy industry companies — many of which are making a profit — to dodge their tax responsibilities.

“I think my confidence is predicated by the fact that my members have given me the authority to do what needs to be done. If there is not a solution, we’re going to raise a lot of heck in the election about this topic, and it’s going to be fixed one way or the other.”

Municipalities surveyed early last year indicated they were owed $253 million by companies that have not paid their municipal taxes.

A new survey is making the rounds, and McLachlin expects to know the new tally of outstanding debt by the end of the month.

Not only municipalities taking a hit. Many landowners are owed lease payments by deadbeat energy companies.

“Why we would let that happen? This is our resource and it’s affecting rural Albertans and it needs to be fixed.”

Municipalities also remain concerned that the province is still determined to forge ahead with the creation of a provincial police force at a cost that remains unclear.

“Nobody knows who’s asking for it. The reasons for it have never been justified and we’ve never seen a pro forma (financial breakdown) that’s really projected what the costs are.”

Municipalities are open to new ideas to improve policing but do not believe now is the time for a dramatic change such as dropping the RCMP, especially at a time when even the Mounties are struggling to get enough recruits.



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