The government can now deliver on what municipalities have been demanding for years: stable, predictable and sustainable funding that the province’s more than 330 municipalities can bank on. With input from local governments, Alberta’s government has finalized the allocation formula that sets out how much individual local governments will receive annually under the upcoming LGFF. To help them plan more effectively for the future, the LGFF will allocate $722 million in capital funding to Alberta municipalities and Metis Settlements for the 2024-25 fiscal year.
As municipalities had requested, the LGFF includes a revenue index factor that ties future funding levels to the percentage change in provincial revenues from three years prior. This was one of the asks of municipalities to ensure that they could have more predictable funding. As a result, the LGFF formula will increase municipal funding by 14 per cent for fiscal 2025-26 to a total of $820 million.
“Communities across Alberta have long asked for funding that is predictable and tied to provincial revenue changes. We have listened and we are delivering. The LGFF will provide infrastructure funding where it’s needed most and allow flexibility for communities to focus their funding on local priorities.”
Beginning in fiscal year 2024-25, the LGFF will replace the Municipal Sustainability Initiative (MSI) as the main source of provincial capital funding for local governments to strike a fair balance between predictable funding and fiscal responsibility. As with MSI, municipalities can focus funding on their local priorities, including roads, public transit, water and wastewater, and recreation infrastructure.
As committed to in Budget 2023, top-up funding will be available in the first year of the LGFF. This ensures that no local government experiences a year-over-year decrease from 2023’s MSI capital funding allocation. This one-time funding will ensure existing infrastructure projects are not disrupted.
Alberta’s government has allocated $3.8 billion to municipalities from 2023-24 through 2025-26 under its 2023 capital plan, which includes the amounts for the next two budget years. Municipalities also receive funding from the federal government for capital projects, which is over and above the provincial funding amount. Provincial funding is distributed through grants to municipalities under the MSI and LGFF and has been used for projects including light rail transit systems in Edmonton and Calgary, and water and wastewater support.
- The MSI program has been in place for 17 years and has provided municipalities with a total of $15.2 billion.