Premier Kenney unveils Provincial Budget 2019

Jason Kenney

The Provincial Budget 2019 so near to Halloween was a little scary but much of the cuts were expected. All municipalities knock at the door expecting some treats but you are going to have to really costume yourself up as one of the Province’s priorities, otherwise what you see is restraint, a toothbrush in the Halloween bag versus the sweet candy. Most seem to understand and appreciate that the drastic cuts to save the Province from formidable debt and interest was harsh but necessary. “All in all, it was a tough budget but we understand why,” said Barry Kletke, Trochu Mayor.

The Communications Manager with AUMA (Alberta Urban Municipalities Association) noted in its response to the budget, quoting President Barry Morishita, “While the province reduces its budget by 2.8% over the next four years, it has proposed reducing our infrastructure funding by almost ten times that amount. With municipal governments currently facing a multibillion-dollar infrastructure deficit, these funding cuts will lead to crumbling community infrastructure or higher taxes for property owners for years to come.”

Said Bruce McLeod, Mayor of Acme, “It appears throughout the budget this government is downloading it’s attempts to balance the budget over their term of office on the backs of all municipalities and the residents of Alberta.” The quote of the day he said, “Hold on tight, it is going to be a rough ride.” Bruce noted the impact to municipalities isn’t just about short term pain with no long term gain. He sides with the AUMA report (website: auma.ca/advocacy-services/budget-2019) highlighting that cities/towns/villages “cannot run deficits” unlike the provincial and federal governments - and, “municipalities will have to make tough decisions without adequate support for items that were cut in this provincial budget.”

County Council knew that the province was going to reduce spending but as Jerry Wittstock, Reeve for Kneehill County pointed out, “At the present time we are not sure if the hit we take will be greater on the revenue side or on the downloading side. I currently am not in a position to be quoted until we as Kneehill County are able to correlate how the Provincial budget will affect us. Regardless of which way I look at it, I believe the taxpayers will end up being the losers.”

Feeling fortunate is Family & Community Support Services. “FCSS breathed a sigh of relief that we did not receive a cut to the provincial share of our funding,” stated Shelley Jackson-Berry, Kneehill Regional FCSS. However, the Province is only part of the equation. FCSS is a partnership between the Alberta Government (funds 80%) and municipalities (funds 20%). “We greatly appreciate the support of our six partnering municipalities who contribute more than required to support area residents. With the cuts to municipalities, this may become a challenge. Based on previous provincial budget cuts and/or program cuts, there is a possibility we will see an increase in access to our programs or requests for program funding. This will push us to be more creative and find new ways to partner to provide the best possible services and supports to our area residents.”

Barry Kletke, Trochu Mayor has been passionate about his Town building a long-term care and supportive living space and as the Town moves ahead with the project, there is support within the Provincial budget. “We are excited to see that the ASLI (Affordable Supportive Living Initiative) grant funding is back! We feel we are well positioned to take advantage of this grant and we hope to be able to apply for it before the end of 2019. We are also happy to see the MSI (Municipal Sustainability Initiative) funding is staying in tact for the next two years and that there will be some type of long term agreement for a replacement to MSI. We also understand the base amount could be 30% less than we get today.”

AUMA’s response to the budget was “Relief that the budget supports municipalities by maintaining critical programs for policing, libraries, FCSS and infrastructure operating budgets for small communities. We look forward to further funding details.” They have concerns on other fronts such as MSI funding. “It is stable for this year but will be depleted over subsequent years, leading to a new fiscal framework with a funding level that fails to address the long-term infrastructure needs of Alberta’s communities.” AUMA also speaks of concerns about the “extraordinary reduction to Grants in Place of Taxes (GIPOT) for municipalities that are home to provincially-owned buildings and facilities. A reduction in grant revenue equivalent to one per cent of property taxes for a city the size of Edmonton is a substantial impact and could result in downloading provincial costs onto city taxpayers.” They recognize and appreciate that municipalities with more than five per cent of their revenue coming from GIPOT will be exempt.

Staff at Kneehill County are currently working on the effects the provincial budget will have, such as that MSI funding but much of their concerns seems to be in limbo. Reeve Wittstock noted, “We expect the MSI funding to change for next year’s budget but its unknown whether the change will be on the capital side, the operational side or on both fronts.” One concern for the County is the new policing costs on municipalities of under 5000 residents with the range of costs tilting between 15% and 70%. “Nothing has been implemented yet on that front.”

As well, the reduction of assessment on the shallow gas wells will reduce revenue to the County by $1.8 million next year, if the province follows through with the promise they made on July 2. “The County has still not been sent the assessment numbers from the provincial assessment office.”

Budget Highlights include moderate cuts to operating spending of 2.8% over four years ($1.3 billion lower than 2018-19 levels), compared to the almost 20% in cuts Albertans saw in the 1990’s. “We are acting now to ensure we never have to deal with that scale of cutbacks again.” The corporate tax rate will be cut back from 12% to 8% through 2022 so businesses can grow and create more jobs. There are tax deferrals for new investments in Alberta of up to $900 million. Albertans will pay more for income tax. There will be $100 million less for nurses, and there will be fewer doctors in rural communities and there will be a $90 million cut to drug coverage. 47,000 people are to be kicked off seniors drug plan and there is an $11 million cut to ambulance services.

Other highlights are to eliminate the carbon tax, saving the average family around $665 per year. A new post-secondary sector funding model includes lifting the tuition freeze. $10 million for ‘Women Building Futures’, $2 million for ‘Skills Canada’, $11.4 million ‘Careers, the Next Generation’. “We have to be vigilant and spend only what we can afford. Otherwise, the interest on what we’ve borrowed will continue to limit our ability to fund public services like hospitals, continuing care centres and schools.” To help make Alberta one of the most attractive places for energy investment in North America, the budget includes the ‘Job Creation Tax Cut’ and the adoption of the ‘Accelerated Capital Cost Allowance’. “The budget honours the current agreements under the Petrochemicals Diversification Program, which provides royalty credits to companies in exchange for building facilities that turn propane, ethane, methane and feed stocks into products.” The province will move to eliminate crude-by-rail. There will be continued support fighting for Alberta’s energy, agriculture, and predevelopment first nations. Funds will also support climate initiatives, law enforcement (up to $50 million increase over four years), rural crime reduction (50 new prosecutors, along with other programs) and the creation of a Heroes Fund and Veterans Scholarship. $20 million over four years will attempt to combat the mountain pine beetle.

The government is forecasting total revenue to remain at $50 billion (2019-20) and $50.1 billion (2020-21) and increasing to $57.5 billion by 2022-23. “Alberta spends almost $2,500 more per person on public services than other big provinces, but without better results. If we matched the average per capita, Alberta would spend $10 billion less each year. To bring the costs of Alberta’s public services closer to the national average, we will have to find more cost-effective ways (including private-public partnerships) to deliver services. Reducing red tape, streamlining processes, leveraging technology and consolidating administrative services is expected to save Albertans $140 million.”

“Previously tax payer supported debt was forecast to rise to $97.1 billion by the end of 2022-23, and debt servicing costs were projected to rise to $3.4 billion.” Debt servicing costs will continue to rise until budget deficits are eliminated, albeit at a much slower pace under this new fiscal plan. “Taxpayer support debt is now forecast to be $93.3 billion at the end of 2022-23 and debt servicing costs are projected to be $3 billion during that year.” The plan is to eliminate that deficit. “We will not saddle our grandchildren with unnecessary costs because we did not address the fiscal challenges before us.”

“Alberta contributes more, per person, to the national economy than any other province. With only 12% of Canada’s population, Alberta attracts one quarter of all capital investment in the country and is responsible for more than one fifth of all Canadian goods exported. Alberta made a $22 billion fiscal contribution to the federal government in 2017.”

“We as council,” said Mayor Kletke, “understand the tough choices the UCP had to make. We are willing to work together with our provincial government to help our community and province succeed and get back on track.”

The actual budget as well as budget highlights can be viewed at alberta.ca