Municipal governments will soon have more clarity about the provincial funding they receive, says Alberta’s UCP government.
The province has finalized the allocation formula that sets out how much individual local governments will receive annually under the new Local Government Fiscal Framework (LGFF), which replaces the Municipal Sustainability Initiative (MSI) as the main source of provincial capital funding for local governments.
The LGFF includes a revenue index factor that ties future funding levels to the percentage change in provincial revenues from three years prior, which the municipalities requested.
For the 2024-25 fiscal year, the LGFF will allocate $722 million in capital funding to Alberta municipalities and Metis Settlements, and funding will increase by 14 per cent for 2025-26 to a total of $820 million.
Mike Olesen, the city’s general manager of growth and finance, said Red Deer will see an increase of about $2.4 million in 2024 and $2.5 million in 2025.
He said it’s an improvement from funding reductions in the past.
“It’s a positive sign that it’s beginning to increase again, and it is sorely needed for our capital infrastructure. It does represent good news for the city,” Olesen said.
The budget certainty that the provincial government is creating is also important so that the city can make sure it’s planning effectively, he added.
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Red Deer begins its budget deliberations in January.
As with MSI, municipalities can focus funding on their local priorities, including roads, public transit, water and wastewater, and recreation infrastructure.
“Communities across Alberta have long asked for funding that is predictable and tied to provincial revenue changes. We have listened and we are delivering. The LGFF will provide infrastructure funding where it’s needed most and allow flexibility for communities to focus their funding on local priorities,” said Municipal Affairs Minister Ric McIver, in a statement.
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As committed to in Budget 2023, top-up funding will be available in the first year of the LGFF. This ensures that no local government experiences a year-over-year decrease from 2023’s MSI capital funding allocation. This one-time funding will ensure existing infrastructure projects are not disrupted.
Alberta’s government has allocated $3.8 billion to municipalities from 2023-24 through 2025-26 under its 2023 capital plan, which includes the amounts for the next two budget years.