Cities and associations are warning Alberta’s budget could have devastating consequences for the province’s infrastructure and construction sector.
“It is very disappointing,” said Ken Gibson, executive director of the Alberta Construction Association (ACA). “The Alberta marketplace is hurting, and I think many of our members look to provincial and municipal infrastructure projects for ongoing business and with the reduction on the capital plan. It is going to hurt a lot of companies and Alberta families who rely on construction.”
Alberta United Conservative Party (UCP) Leader Jason Kenney called his budget a response to Trudeau’s administration which he believes has “actively campaigned against the province’s prosperity.” He said the budget is intended increase the province’s self-reliance as it works to regain its place as the economic driver of the country.
“This is the most important Alberta budget in 25 years,” he said.
Alberta’s four-year plan includes $24.2 billion for capital projects, a $2.8-billion cut from the previous government’s budget. Edmonton and Calgary are also facing cuts. Both were promised a combined $3 billion from the province for the Valley Line and Green Line LRT projects but won’t seen all those dollars until after 2023.
“The challenge is that large projects, like P3s, only help a very small number of contractors,” said Gibson. “If you look at a big LRT project, it is lots of dollars but many of our members are unable to participate. So even if you have the dollars showing up in the capital budget, that’s not the same as what they have replaced. Smaller projects are where a lot of our members can really participate.”
Gibson noted that construction is one of Alberta’s largest employers, directly accounting for approximately 240,000 jobs with thousands of additional jobs in related occupations.
He added that reductions in infrastructure investment discourage young people from choosing a career in construction, discourage existing workers from remaining in construction, disrupt training of new apprentices, lead to financial hardship for companies, and reduce value for the taxpayer when industry capacity struggles to rebuild to meet periods of high demand.
The budget aims to rework how municipal projects are funded, which has caused concern from cities and other stakeholders.
According to the province, capital grants to municipalities were found to be 20 per cent higher than the national average and the province can “no longer affording to provide the level of funding municipalities have received in the past.”
The budget will reduce the Municipal Sustainability Initiative (MSI) funding by $236 million over the next several years.
The Alberta Urban Municipalities Association (AUMA) stated it was relieved that the budget supports municipalities by maintaining critical programs for policing, libraries, Family and Community Support Services and the infrastructure operating budgets for small communities, but it has concerns.
“Despite a lack of consultation from the government on a new municipal funding framework, AUMA will continue to advocate for a framework that supports the province’s financial goals while also meeting the needs and responsibilities of our communities,” said AUMA president Barry Morishita in a press release. “While the province reduces its budget by 2.8 per cent over the next four years, it has proposed reducing our infrastructure funding by almost 10 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.”
The association stated it believes the changes to the MSI will fail to address the long-term infrastructure needs of municipalities.
Calgary Mayor Naheed Nenshi had a tense press conference where he told reporters the UCP had broken its promises to the city. Nenshi explained that the UCP pledged to stick to a funding agreement called the City Charter’s Fiscal Framework Act. He crumpled up a piece of paper the throw it to the ground, proclaiming the promise had been broken.
He stated that Calgary and Edmonton have already been hit with a 40 per cent funding cut and now must give up another 9 per cent.
“Despite our desperate needs for roads, bridges, and social infrastructure, we’re being singled out to take a much larger cut than every other municipality in the province,” Nenshi told reporters. “Every dollar that we had been promised, that had been agreed to, has already been allocated for fixing potholes, for building bridges, for buying buses, for filling out social infrastructure. So clearly, cutting this even further means some of those things aren’t going to get built. And my colleagues on council and I are going to have to have some real tough conversations about what is going to go by the wayside.”
Edmonton Mayor Don Iveson also felt the UCP had reneged on its commitments.
“We had no sense that the city charters fiscal framework was going to be ripped up today, particularly since that was a promise in the UCP platform,” said Iveson to reporters. “We’re going to have a lot of work to determine which projects are going to have to be cancelled that’ll be affected by this. That will have an economic impact in terms of jobs, in terms of consumer confidence.”