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Bridging the Municipal Funding Gap: More expenditures, same revenue sources

"There's a morphing for sure from what our core services are to the gaps that we find ourselves standing in," Sturgeon County Mayor Alanna Hnatiw said. 
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Municipalities are constantly taking in more responsibilities and in Sturgeon County, climate change and clean air are important to residents so the county has started to fund and take a leading role in hydrogen projects in the region,

Municipal governments were not always tasked with providing affordable housing in their communities, but after years of demands from residents and the province not keeping up funding with demand, local governments started to provide affordable housing to residents.

Mayor of Brooks and former president of Alberta Urban Municipalities Association Barry Morishita said for many years the federal government and the province have given funding to building affordable housing in communities, with the province leading the projects and building housing in communities.

“[The province] hasn't built any new housing significantly in the last several years, to my knowledge, but our community needs housing,” Morishita said.

As a result, the city donates land at no cost to Habitat for Humanity or the Brooks Housing Society to build housing for those with lower incomes to live.

“And that's just in housing,” Morishita said, adding the city has started to pay for things such as supporting women’s shelters and areas of education.

For social services, agencies often get housed in a city-owned building, which results in a significant subsidy from the local government.

“The community helps pay for their accommodation in order to keep the service, because there have been funding cuts and incremental cuts over the last 10 or 12 years,” Morishita said.

Other times, a percentage of funding will get cut by for programs by the province, but the group needs all the funding to remain open, so municipalities can find themselves kicking in 20 per cent of the budget for programs in their communities just to keep them open.

When funding cuts are delivered, most communities and elected councils realize the community still needs the service to survive, which includes things such day cares, and the municipality will jump in to provide support even though it isn’t a direct responsibility outlined by the province.

If community members notice a service disappear, they will often come to their local government to fill the gap, not knowing which order of government delivers on the service traditionally, which leaves local governments scrambling to find solutions in their communities. 

Recently municipalities were asked to deliver on services they haven’t traditionally been involved in, said Dr. Enid Slack of the Munk School of Global Affairs and Public Policy, who is an expert in municipal finance.

“And more recently, they've been asked to face a whole lot of other issues around climate change, around the housing, around income inequality and around immigration settlement,” Slack said.

There are a lot of changes on the expenditure side of municipal budgets, but on the revenue side, communities are left collecting money the same ways they have always had to, through property taxes, user fees, and transfers from federal and provincial governments

“So, the nature of what they're doing is changing. The nature of revenues has stayed the same," Slack said. 

Rural Municipalities president Paul McLauchlin said communities are constantly having to do things for their residents that should be funded by other orders of government and as a result, local governments have way more responsibility than they have in the past. 

"It's kind of a non-stop issue that the government just keeps pushing things to down to us, but we don't have the resources to address them, and this downloading has been creeping," McLauchlin said. 

For many projects, decisions are made and funded through all three orders of government, but local governments are always the smallest voice at the table that has the most responsibility for the project. If a community needs infrastructure, such as a road or better Internet, to attract investment and business to the area, they can be left funding projects on their own without the help of other orders of government even though it doesn't fall under their responsibilities. 

Sturgeon County Mayor Alanna Hnatiw said the services that communities offer changes over time. 

"There's a morphing for sure from what our core services are to the gaps that we find ourselves standing in," Hnatiw said. 

The mayor said many of the services communities are happy to take on, but they must find the capacity to deliver what is expected of them. When the responsibilities come, they come without funding. 

In Sturgeon County, the municipality has been investing heavily in tackling climate change and a changing energy economy by digging into hydrogen

"We've spent quite a bit of time in the last couple of years investing in exploring the hydrogen conversation ... and we're doing that because we need to protect our air shed," Hnatiw said.

The mayor said this has never been something they have been tasked with, but recognize it is important to take care of the environment.

"We think it's an important part of aligning ourselves with other levels of levels of government, taking care of the environment, so that's kind of something that we've taken on and I would say [is] driving the hydrogen conversation here."

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Jennifer Henderson

About the Author: Jennifer Henderson

Jennifer Henderson is the Local Journalism Initiative reporter for Great West Media based in St. Albert, Alta.
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