UCP announces capital funding they announced in February

Earlier this week, the Alberta government announced that municipalities within the province will have access to $1.1 billion for infrastructure projects and select operating costs.

According to the announcement, the provincial government will provide $500 million for infrastructure projects, and the federal and provincial governments will go halfers on $466 million in funding for municipal operating costs and $140 million for public transit operating costs.

The government referred to the capital infrastructure as “additional funding”. That sort of wording might give the reader the impression that they’re spending $500 million more on infrastructure projects than they had originally budgeted.

Except I don’t think that’s what it actually means.

This funding will be made available through grants, which-despite set amounts being put aside for each municipality-interested municipalities must still apply for.

If we look at the Capital Plan in the March 2020 fiscal update, we see that capital grants in the last fiscal year were $1.8 billion, while this year, they’re $2.302 billion, an increase of $502 million.

So, while it technically is an additional $500 million, that’s not on top of what was already budgeted; that is what was budgeted.

And before we get too excited that the UCP are spending more this year than last, there are some things we should remember.

First, while the UCP government spent $1.8 billion on capital grants last year, the y had budgeted $2.086 billion. So they spent $84 million less last year than they had budgeted. Not only that, but they spent $152 million less than the NDP had in the last year of their term.

Second, even if we say that the increase is only $84 million more than last year, it doesn’t even account for population growth and inflation.

In the second quarter of 2019, the population of Alberta was 4,350,901. In the second quarter of 2020, the population of Alberta was 4,428,247. That’s an increase of 77,346, or 1.8%.

As far as inflation goes, as of last month, Alberta’s inflation rate for 2020 sat at 1.0%, but compared to 2019, it had increased to 1.71%.

If we add the 1.8% population growth and the 1.71% inflation over the last year, we have a combined growth of 3.51%. If we increase the 2018–2019 capital grant amount by 3.51%, we’re left with $2.021 billion that should’ve been spent last year, instead of $1.8 billion. And if we use the same growth rate for this year, the budget for capital grants for the current budget year should be $2.091 billion.

That means the $2.302 billion in capital grants budgeted for this year is a $211 million in additional funding, not the $500 million the UCP government claimed in the announcement.

Enough of number clarification. What can the grants be used for?

Eligibility

Well, according the the 2020–2021 budget released in February, here’s where the $2.302 billion in capital grants will be spent.

As you can see, the largest single chunk will be issued through the Ministry of Municipal Affairs, followed by the Ministry of Transportation.

According to the Municipal Stimulus Program page on the government website, eligible capital projects will include the following:

• Roads
• Bridges
• Water and wastewater systems
• Public transit
• Recreation

Only projects that wouldn’t be built without this grant will be considered. As well, the provincial government won’t consider any projects that’ll require more operational funding from the province after construction is complete. Nor will they consider projects that lead to municipal tax increases.

So, basically, only projects that require no staff after construction will qualify.

So, even though the announcement claims that the capital funding will lead to 2,500 jobs, none of them will be long-term jobs to manage the facilities built by the grants. They’re all temporary, contract jobs.

Allocation

Every municipality (other than summer villages) has been allocated a minimum of $50,000, with additional funding being distributed based on populations. Summer villages have a base allocation of $5,000.

Naturally, Calgary and Edmonton have been allocated more than half of the funding: $153 million and $116 million respectively.

The Regional Municipality of Wood Buffalo (Fort McMurray) could receive the third largest share at up to $13 million, followed by Lethbridge and Red Deer-who’ve been allocated roughly $12 million each-and Strathcona County, at $11,694,461.

Municipalities have until only 1 October to apply for the grant and commit their funding allocation; otherwise they lose it. They must also spend it by the end of next year.

Originally published at kimsiever.ca on 31 July 2020.