City infrastructure funding to be cut by $150M over four years

The City of Edmonton is projecting a $150-million cut to infrastructure funding from the province over the next four years.

Alberta's 2021 budget, released last week, outlined reductions to the Municipal Sustainability Initiative (MSI), which provides dollars for municipalities to put toward construction and renewal projects.

In a presentation to city council Thursday outlining the impacts of the budget, the city's chief financial officer, Mary Persson, said this change will impact the current infrastructure plan and require difficult decisions on what projects may face the chopping block.

The city did receive $115.6 million in construction dollars from the province last summer as part of the COVID-19 recovery plan, but Persson said the anticipated stimulus from these funds will now be negated by the cuts.

“Instead of creating more jobs and rejuvenating the economy, funds must be redirected to maintain the existing capital plan,” she told councillors. “Those funds could have been used for various capital projects that resulted in high-paying jobs, helped stimulate the economy and met many of council's priorities.”

These priorities include affordable housing, environmental initiatives, infrastructure renewal and pandemic management, which Persson said will no longer receive that funding.

Mayor Don Iveson said he is deeply concerned with the cuts not only to city funding but to partner post-secondary institutions, like the University of Alberta, that help drive Edmonton's economy.

“It's very disheartening and not just for Edmonton but for the future prospects of cities in this province of all sizes,” Iveson said. “It's layer after layer after layer and it just really constrains what the city can do even on basic maintenance, which is a job creator.”

In the budget, the province front-loaded MSI funding in 2021 to provide dollars upfront for more construction projects and jobs, but that will lead to a reduction of $375 million both in 2022 and 2023.

The base funding amount for the new Local Government Fiscal Framework, which was delayed until 2024, was also cut by $138 million.

As a result, the city is anticipating a $120-million reduction in 2023-24 based on previous funding allocations. This funding reduction equates to the city's entire four-year open spaces renewal, one-third of facility renewal and about 325 kilometres of arterial road renewal.

Before the new fiscal framework plan was introduced, the province abandoned the City Charters, which was another sustained infrastructure funding agreement with Edmonton and Calgary. Iveson said he is frustrated with the inconsistent changes to funding for municipalities, as it doesn't allow them to plan in advance and continue investing in needed infrastructure improvements.

“I'm quite frustrated with this because we negotiated a whole bunch of these things in good faith and then the government ran on them and guaranteed them in their election material, guaranteed Albertans that they weren't going to walk away from the City Charters and those mechanics,” he said. “And long before COVID -19, they tore up those promises and then here we are getting pounded again.”

The Alberta government is reallocating the $375-million cut from MSI in 2022-23 into an economic recovery capital envelope, but it's not known if any of this funding will go toward municipalities directly.

Persson said Edmonton Northlands, organizers of K-days and Farmfair International, will also see further cuts in 2021. After receiving $9 million in 2020, Northlands and the Calgary Stampede will split $6.8 million — the allocation for each isn't clear.

Council passed a motion to get more details on the cumulative impacts of the budget reductions on jobs and economic health to the city and region as well as a summary of historical capital and operating cuts to the city.

Meanwhile, council unanimously approved a one-month extension of the Tipinawâw 24-7 shelter at the Edmonton Convention Centre until the end of April with an additional $2.2-million investment from the city's reserve.