The Alberta NDP is asking the provincial government to reverse a decision to raise property taxes for Albertans by increasing municipal borrowing costs.
According to an Alberta Treasury Board and Finance memo shared by the NDP, the provincial government said it will be adding a 0.5 per cent to 0.75 per cent premium to borrowing rates for local authorities as of December.
“Historically, loans have been provided to local authorities with low interest rates and generous other terms by the government,” the memo read.
“Alberta can no longer afford to continue lending money to local authorities below market rates.”
The NDP said Tuesday in a press conference from Red Deer City Hall, the new borrowing rate is expected to add millions of dollars’ worth of interest payments to municipal projects. It also comes at a time when the UCP announced in this year’s budget that it is cutting municipal infrastructure spending by $1 billion.
The NDP says the cuts, coupled with higher interest rates mean local authorities will have to borrow more money and pay more interest to continue building infrastructure projects.
“Albertans are already struggling to make ends meet as they pay more for income tax, more property tax, more school fees, more tuition, more interest on student debt, more camping fees, more for auto insurance and more for utilities,” said NDP Municipal Affairs Critic Joe Ceci.
“Increasing borrowing rates for municipalities will further download costs onto Albertans and make monthly bills even more punishing.”
Due to the size and security of the Alberta government, the province can borrow money for capital projects at a better rate than a city, a town or a county can. The province would then loan money to local authorities at the same low rate it receives from financial markets.
However, the province now claims it can’t afford to keep offering Alberta’s borrowing rate to municipalities despite Alberta expecting strong resource revenues this year.
“This extra money will come directly from property taxpayers’ through higher property taxes,” added Ceci. “It’s wrong for the UCP to be taking money out of the pockets of Alberta families and small businesses like this and this decision needs to be reversed immediately.”
The province noted in the memo that it will continue to lend money to municipalities.
“For most borrowers, the rates and other terms, such as being able to borrow at fixed rates for periods beyond five years, will continue to be attractive compared to other methods of borrowing,” it read.
“As a result of the pandemic and other fiscal and economic impacts over the past several years, Alberta’s debt has grown substantially and Alberta’s Loans to Local Authorities program is funded by provincial borrowing. This change will ensure the program is sustainable going forward.”