Alberta’s United Conservative Party government says it is considering the unprecedented step of allowing cities throughout the province to run deficits as they battle the COVID-19 pandemic and its subsequent financial impact.
As it now stands, Alberta’s Municipal Government Act doesn’t allow municipalities to budget for a deficit.
In some cases, cities may still run deficits when something unexpected happens to increase expenditures or reduce revenues, but they aren’t allowed to intentionally plan for one.
In a statement to Global News on Monday evening, Minister of Municipal Affairs Kaycee Madu said the government is considering whether greater flexibility in budgeting for deficits is needed.
“Our government is continuing to work with our municipal partners through this pandemic. We are listening and we will continue to listen,” Madu said. “With respect to maintaining deficits, we have heard this request, and given the circumstances, we are carefully and seriously considering it as a temporary measure.”
However, speaking to Global News on Monday evening, Calgary’s Ward 3 Coun. Jyoti Gondek said she doesn’t feel the move would be a solution to the problem.
“What we need is stronger partnerships with the federal and provincial governments so they understand what our limitations are,” Gondek said. “For example, only having property taxes as our reliable revenue stream has led to the situation.
“We need to unpack all of the issues that municipalities have while we’ve got this opportunity to do it.”
She said she feels municipalities are more fiscally responsible as a result of not being able to intentionally run a deficit.
Speaking at a news conference on April 15, Calgary Mayor Naheed Nenshi said the City of Calgary is losing an estimated $10 to $15 million a week in revenue from areas like public transit and recreation.
He said it would be “critical” for the federal and/or provincial governments to offer financial aid to municipalities.
“We only have, really, two sources of income — which are property taxes and user fees,” Nenshi explained.
“We have to be made whole by the end of the year because we can’t easily run deficits. Even if we could, that wouldn’t be the right answer because running a big deficit this year simply means higher property taxes next year.”
– With files from Michael King