Alberta Liberal response to Question 02

Question: What will you do to improve the large cities' financial capacity and sustainability, including providing more flexible means to finance the range of services and infrastructure that the cities now provide?

Answer: Besides granting Calgary and Edmonton broad permissive powers to ensure that they have the flexibility to provide services and manage growth, Alberta Liberals will expand the range of financial and tax tools available to those cities to enable them to generate revenue from new or different sources. We see this as being done through an equal and collaborative partnership where the cities are encouraged to bring forward their own unique revenue generation ideas. An example of this is the optional penny tax (OPT) proposal that was floated recently by the Transformation Calgary business group. We believe the OPT idea has merit and, as government, we’d be prepared to collaborate on and facilitate its implementation. For Calgary and Edmonton specifically, we would also be prepared to increase or remove the debt carrying limit that the province imposed on municipalities in 1994. This would allow those cities the flexibility to rely more heavily on issuing long-term ‘smart’ debt to meet their infrastructure needs. Additionally, we would grant Calgary and Edmonton full authority over the community revitalization levy (CRL) process (also known as tax increment financing), and would repeal the requirement that use of this funding mechanism be approved by the provincial government in each instance. This is another example of acknowledging the mature status of those cities, respecting their autonomy, and cutting unnecessary red tape.

Question: What are your plans for long-range, sustainable, predictable capital funding for the large cities?

Answer: Alberta Liberals will phase out the Municipal Sustainability Initiative (MSI) and replace it with a bold new municipal financing arrangement designed to empower municipalities and to allow them to better meet their obligations.  As discussed above, this will include expanding the range of financial and tax tools available to those cities to enable them to generate revenue from new or different sources.

Our fiscal plan calls for the establishment of a dedicated Municipal Heritage Fund in 2014, whose sole purpose will be to provide local governments with a stable and reliable source of funding. Like the Alberta Heritage Savings Trust Fund, we envision the Municipal Heritage Fund having a diversified portfolio of assets that are significantly added to annually by a portion of provincial resource revenues. All municipalities will receive 75% of the Fund’s return on investment annually, on a per capita basis. This revenue will be additional to all other existing funding. The Alberta Liberal plan also provides that 25% of the Municipal Heritage Fund’s earnings will go directly to community leagues and neighbourhood associations province-wide to provide the most local form of citizen participation with the means to turn neighbourhood priorities into reality. Where such community groups do not presently exist, per capita funds will be held in trust while local governments facilitate the creation of such groups.

In addition to the Municipal Heritage Fund, Alberta Liberals are creating a new fund for green transit available to municipalities across the province; money in this fund will come from applying Alberta’s existing carbon levy to real emissions rather than intensity emissions. Half of the proceeds of this levy will be dedicated to green municipal transportation projects. Our projections suggest this will provide in the range of $900 million in new funding for municipalities every year; this will mean in the range of $300 million in new funding available to the City of Calgary (and roughly the same to Metro Edmonton) for green transit initiatives every year.  We assume that the City would decide to allocate the bulk of this regular, annual revenue stream to LRT expansion and improvement.

Question: Specifically, what sources of revenue are you willing to share with Calgary and Edmonton? 

Answer: A portion of provincial resource revenues will be placed in our Municipal Heritage Fund annually, and revenue generated by that fund will, in turn, be used to provide municipalities and communities with a stable and reliable source of funding. Because oil sands revenue will begin rising significantly in mid-decade, our initial intention is to place approximately $1.5 billion in this fund every year. Subsequent significant annual contributions to the fund from resource revenue will guarantee large annual incremental increases in the per capita payments to municipalities by the fund.

The Alberta Liberal platform will also apply Alberta’s existing carbon levy on our largest emitters to real emissions rather than intensity emissions. The funds from this program will be split between industry-driven technological improvements and a green transportation fund that will be accessible to municipalities across Alberta. This is projected to provide in the range of $900 million annually; that’s roughly $300 million in new funding for Calgary and Metro Edmonton annually, and is projected to reach the $1 billion range over our first mandate for EACH of the cities.  In our second term, with the carbon levy fully phased in, this funding would total approximately $1.5 billion per city.

In terms of expanding the range of financial and tax tools available to Calgary and Edmonton, we are also open to granting them authority to institute local add-on levies in areas that have so far been the exclusive domain of the provincial government – with the following provisos: the levy would have to be used to generate revenue for a specific local infrastructure project only, would have to be voted on and approved by a simple majority of residents before being implemented, would be levied for a limited period of time only (with the option of being renewed if approved by residents), and would have to be discontinued once the required revenue was generated. In this way, local governments in Calgary and Edmonton would be fully accountable to residents if they opted to pursue a revenue mechanism such as this. We think it’s important that the decision be theirs. It’s another way that we’re saying “Yes” to those cities and letting them govern.

Question: What are your plans for the education portion of the property tax?

Answer: Alberta Liberals are certainly not averse to further reducing or even eliminating the education property tax and allowing municipalities access to the vacated tax room if, in post-election discussions with municipalities that we’ve committed to, it’s determined and agreed upon that this is the most appropriate way for the province to proceed. One thing’s for certain – the province can’t keep increasing its property tax requisition (which increased by about 7.5% in the last year) without giving municipalities more options for generating their own revenue.

Question: What are your thoughts on the future of existing infrastructure programs, including the MSI?

Answer: The Alberta Liberals will phase out the Municipal Sustainability Initiative (MSI) and replace it with a Municipal Heritage Fund as the primary means of funding municipalities. We will also conduct a review of other municipal grant programs to determine if they should be modified, combined or discontinued. Our view is that provincial funding for municipalities should be provided with little to no strings attached, and that local governments are best positioned to determine what their own priorities are and how money should be spent. We agree with the AUMA that grants still have a purpose, but shouldn’t be used to fund critical core municipal services.

Alberta Liberal official website -