Candidates search for municipality funding plan

By Darcy Henton, Calgary Herald; with files from Keith Gerein; Edmonton Journal August 6, 2011

Just five years after Ed Stelmach announced his plan to provide sustainable funding to Alberta municipalities, Tory leadership candidates in the campaign to replace him are searching for a better way to achieve that goal.

Premier Stelmach's plan, a plank in his 2006 leadership campaign, promised sustainable long-term funding municipalities could count on to build their necessary infrastructure like roads, bridges, water and waste water systems, sports facilities and libraries.

His 10-year municipal sustainability initiative (MSI), launched in 2007, was supposed to provide municipalities with about $1.4 billion annually - the equivalent of the funds they collect through education taxes - by 2010-11. It never happened.

The funding started at $400 million in 2007 and has hovered around $870 million for the past two years while Stelmach's Conservatives have struggled to get the provincial books back into the black.

Aside from the broken funding promise, municipal officials complain there are too many strings attached to the money and too much red tape in applying for it.

Former Calgary Mayor Dave Bronconnier was skeptical from the start, calling the initiative "hocus-pocus, boogabooga economics."

Tory candidates agreed Friday in a half-day session in Edmonton with rural politicians representing Alberta's Association of Municipal Districts and Counties that they have to come up with a better method of supporting municipalities.

Doug Horner, a former minister who has held portfolios in agriculture and advanced education, proposed removing the cities of Edmonton and Calgary from the funding formula. He says their needs are much different than smaller municipalities.

"Not every region is the same and the cookie cutter approach isn't going to work," he said.

A per capita MSI funding formula doesn't address the infrastructure needs of a rural municipality that sees its roads pounded apart by oilfield trucks, he explained.

"The formula might be a little bit different for an area of high population concentration versus an area of high economic activity," he noted.

Horner is also sympathetic to the complaints of municipal officials about the amount of time they spend applying for grants from a government that receives a large portion of the property taxes they collect in their jurisdiction.

He said they wonder why they have to fill out the applications and "almost beg for the money" and have to prove that their priorities are legitimate.

"I agree with them," he said. "They are held accountable every three years in their municipal elections just as we are held accountable every four.

"I think that's a fair way to deal with them."

Horner says municipalities should get the money "up front" at the beginning of the year and be allowed to determine how to spend it. They should also be allowed to hold portions over from one year to the next, he added.

Gary Mar, who held health and education portfolios in the Klein government, has proposed handing over the education portion of the tax to municipalities straight up, but some smaller municipalities are balking at that, concerned they will end up worse off.

Ted Morton, Stelmach's former finance minister, said just simply dropping the MSI and flipping municipalities their share of the property tax would create winners and losers.

He called it a simplistic approach that was fraught with problems.

While he would be willing to sit down with municipal leaders to work out a new funding framework, he said the province and municipalities first have to define their separate responsibilities and agree on who pays for what.

"The MSI is a 10-year commitment," he noted. "We're only four and a half or five years into it. I am committed to finishing that out."

But urban municipalities like the concept of retaining the education portion of property tax. Darren Aldous, president of the Alberta Urban Municipalities Association, said his members want to see a shift away from the grant system when the MSI program expires.

"We have municipalities that employ professional grant writers to get the grants that are out there. Small communities don't have the capacity to even apply or account for all of the grants, so they miss out. To me that's wrong," he said.

"We collect education property tax, send it to the province, they send it back to us piece by piece, so you can imagine how much value it loses each time it passes through somebody's hands."

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