Roundup: Pre-Election Politics in Alberta

As you know I stay fairly focused on municipal issues, especially as they relate to Edmonton. But with the provincial budget set to be released on Thursday, a televised address from the Premier tonight, the review of the Municipal Government Act, and expectations of an imminent election, I’ve been thinking more about provincial politics lately. Here’s a brief summary and some thoughts on what I’ve been paying attention to.

Premier Prentice’s TV Address

Tonight, Premier Jim Prentice delivered a 16 minute address called Alberta Looks Ahead on CTV (which apparently cost between $80K and $100K). “We are a turning point in our province,” he said at the beginning. He described the need for “thoughtful decisions for the future” and said Albertans have told him they want balance.

The highlights as I understood them:

  • A 10 year plan will be introduced with the budget, with three pillars: strong fiscal foundation, building a lasting legacy, securing Alberta’s future
  • There will be no sales tax and Alberta will retain “the most competitive tax system in Canada”
  • The goal is to be back to a balanced budget by 2017
  • The government will hold the line on expenditures, which essentially means cuts in a growing province
  • Albertans will be asked “to contribute to the costs of the health system”, slowly at first but growing over time
  • By 2018-2019, 75% of energy revenue will go to program spending
  • By 2019-2020, 50% of energy revenue will go to program spending, with 25% going to emergency funds and paying down the debt and 25% going to the Heritage Savings Trust Fund

The Premier talked a lot about how he is determined to restore our commitment to the Heritage Fund, and said “paying off our debts is something we simply must do.” If I remember correctly, he mentioned only two former Premiers by name: Peter Lougheed and Ralph Klein.

Perhaps this is a more accurate, succinct recap courtesy of Marty Chan:

There were no “look in the mirror” comments tonight, but I did love the soundbite toward the end when Premier Prentice spoke about “a spirit of openness across every segment of Alberta”. He offered some examples, including “from bloggers to loggers,” which led to this gem:

Dave is probably the most well-known political blogger in the province. You can see his latest nomination update post here.

The Premier is also planning to host a series of Telephone Town Halls along with various Ministers, on March 25 and March 30. You can dial in toll-free at 1-855-269-4484. Tonight I saw many complaints about robocalls, so it’ll be interesting to see how those town halls are received.

Budget 2015 Consultations

The Province conducted an online survey for Budget 2015 and in total received 40,513 responses. The survey was open from February 5-28. Some of the key findings include:

  • 9 out of 10 respondents feel low oil prices will greatly or somewhat affect the Alberta government’s ability to budget
  • when asked what is the right balance to respond to the drop in revenue, Albertans were split almost evenly 3 ways between reducing spending, increasing revenue and running a deficit budget
  • 9 out of 10 respondents feel government needs to take action either immediately or within this year

I’m not sure how representative the results are, but it’s useful data to consider nonetheless. Budget 2015 will be released on Thursday, March 26.

Perhaps most interesting to me is that the survey results were made available through the Open Data Portal! This enables you to ask the hard questions, like: how long did the average person take to fill out the survey? The average length of time was 7 minutes, with the median at 11 minutes. Ignoring the records that were greater than 90 minutes (people leave tabs open all the time) here’s what the data looks like in a chart:

budget survey time taken

You can download all the data as a 13 MB Excel file. Give it a go and have some fun!

I hope this is a sign of things to come in terms of making information available through the open data catalogue in a timely fashion.

Municipal Government Act Amendments

Last week, the Government of Alberta tabled amendments to the Municipal Government Act. You can get a brief overview of what’s changing here. From the news release:

“The last major consolidation of the MGA took place in 1995, after nearly 10 years of review. The current MGA review began in 2012 and has involved input from more than 1,200 written submissions, and more than 1,500 people at 77 community meetings.”

A few of the proposed changes I found interesting:

  • Municipalities would be required to adopt public participation policies that outline their approaches for engaging with stakeholders. Edmonton already has a policy for this and is actively review and improving its approach to public engagement.
  • Existing petition requirements make it difficult to successfully petition a municipality, so one proposed changed would allow municipalities to change the rules for petitions.
  • Currently municipalities need to use snail mail or newspapers to notify the public about things like bylaws and public hearings, but this is 2015! The proposed change would make it possible for municipalities to announce notifications online or using other methods as they see fit.
  • Another change would require municipalities to adopt three-year operating plans and five-year capital plans. Edmonton is already moving in this direction.
  • Municipalities are currently required to have statutory plans, but there is no explicit hierarchy specified, they simply need to be consistent with one another. The proposed change is to identify the hierarchy and relationship of those plans. In Edmonton, this could impact The Way Ahead.
  • Another change would allow for the creation of civic charters, which the Province, Edmonton, and Calgary have already been pursuing.

There are more amendments still to come. Additional review and consultation will take place this spring with the goal of proclaiming the fully revised MGA and regulatory updates by the end of 2016.

MSI Funding (March 2015)

Another pre-election, pre-budget announcement was about the allocation of $400 million in MSI funding. Edmonton is slated to receive just over $80 million out of that, which is less than half of what the City was expecting for 2015.

“Until we get the provincial budget, I won’t know how much additional dollars are available and we won’t be able to make any decisions about which projects go ahead until we see the provincial budget,” said Mayor Don Iveson.

For its part, the Liberals have called the MSI announcement “an elaborate ruse” due to some creative accounting with the Basic Municipal Transportation Grant.

Wildrose Leadership Race

Also tonight, we held our third #abvote Hangout at http://abvote.ca. In addition to Dave, Ryan, and myself, we had the three Wildrose leadership candidates join us: Drew Barnes (MLA for Cypress-Medicine Hat), Derek Fildebrandt sitting in for Brian Jean (Former MP for Fort McMurray - Athabasca) and Linda Osinchuk (Former Mayor for Strathcona County). We started with a discussion about the Premier’s address, and then moved on to some other questions for the candidates.

You can watch the archived video on YouTube or here:

I asked a question about how they’d support municipalities, and of course the Wildrose 10/10 plan came up, which would allocate 10% of tax revenues and 10% of surpluses to municipalities.

They’re rushing this race, but with speculation the writ will drop on March 30, they don’t have much of a choice. You can learn more about how voting works for the leadership race here. The Wildrose party will announce its next leader on March 28 in Calgary.

Other

I have already mentioned these things in previous roundups but it’s worth linking to them again:

That’s it for now! Stay tuned for our next Hangout and follow all the latest stuff online using #ableg and #abvote. Now I guess I had better go update the Election Results dashboard

Edmonton’s Valley Line LRT moves forward with commitment from the Province

It was the announcement Edmonton was hoping for last Thursday when the Province unveiled its Budget 2014: money for southeast LRT extension to Mill Woods.

Valley Line LRT Funding Announcement

Edmonton’s Valley Line LRT is moving forward after the Province today made a commitment to provide up to $600 million to help finance the project. In a prepared statement, Premier Alison Redford said:

“Alberta is preparing to welcome a million new residents over the next decade, many of whom will be choosing communities like Edmonton as their home. Our Building Alberta Plan is helping municipalities build public transit systems to accommodate growth and make it easier for Albertans of all ages and levels of mobility to get where they need to go.”

In stark contrast to his disappointment last Thursday, Mayor Don Iveson was understandably pleased with today’s result, calling it “a momentous occasion”:

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Today’s announcement was a bit over-the-top in my opinion, with Premier Redford, cabinet ministers, and MLAs arriving at Churchill Station via LRT. I think Mayor Iveson picked up on the pomp as well, joking that he hoped the ministers enjoyed their trip on the LRT.

Valley Line LRT Funding Announcement

It was a good opportunity for Edmontonians to show support for LRT expansion however, with students from City Hall School holding up #yeg4lrt signs at the top of the escalator. There was a sizable crowd gathered and lots and lots of media on hand to capture the event. If you’d like to watch the announcement, you can see the raw footage here.

What the Province has committed to is:

  • up to $250 million under GreenTRIP over three years beginning in 2016-17 upon approval under the second call for GreenTRIP projects,
  • up to $150 million in matching provincial funding if the federal government approves this project under the new Building Canada Fund beginning in 2016-17, and
  • up to $200 million in an interest-free loan to be repaid by the city over 10 years, fully backed by the Alberta Capital Finance Authority (ACFA).

As Mayor Iveson noted today, only $400 million of that is new money. The interest-free $200 million loan is simply a creative way to bridge the gap.

Valley Line LRT Funding Announcement

It is unusual though not unprecedented for the Province to offer interest-free loans to municipalities through the Alberta Capital Finance Authority (ACFA). For instance, a program known as “ME first!” launched in September 2003 and provided interest-free loans to encourage municipalities to achieve energy savings in their operations. It is common for the City to receive loans from ACFA for infrastructure projects, with typical interest rates ranging from 1.6% to 3.3%. Some projects that the City has previously borrowed for include the Whitemud Drive/Quesnell Bridge rehabilitation, the Walter Bridge replacement, and the NAIT LRT line. Any loans would be subject to the Municipal Government Act, which outlines debt limits and other restrictions. Edmonton is well within both the provincial debt limit and its own more strict limits.

Technically the money won’t start flowing until 2016, which perhaps not coincidentally happens to be the pre-election budget. It certainly did feel like a politically motivated announcement today. The Province received immense pressure from Edmontonians after last week’s budget and Mayor Iveson and his colleagues on Council did a good job of harnessing that to their advantage (the mayor even played along with the #SadDonIveson meme).

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As Dave noted today:

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Still, the assurance from the Province means that the City can keep the project moving forward, and that’s a win for Edmonton. We won’t lose a construction season, and the federal funding will likely be received without issue. Mayor Iveson confirmed:

“Knowing that we have a clear pathway to apply for those dollars allows City Council to consider moving ahead to the next step of this journey.”

The mayor thanked Council, our regional neighbours, and the ministers at the Province for working hard to get the deal done.

Valley Line LRT Funding Announcement

I know many people have been working on this for a long time, but I think Mayor Iveson deserves a lot of credit for making this happen. He expressed disappointment and frustration last week, but did not alienate the cabinet ministers he needed to work with to move things forward. He kept the lines of communication open, and clearly said the right things.

Today’s news, while positive for the Valley Line LRT, is not the long-term commitment that the mayor has been seeking, but it is another step in the right direction.

Valley Line LRT

Here’s a look at what the Valley Line LRT will look like from Mill Woods to 102 Avenue downtown (subject to change):

The City’s website has already been updated with details related to the funding:

“Thanks in part to timely commitments by our provincial and federal partners, the Valley Line will remain on schedule for a construction start of 2016, aiming to be open to the public by the end of 2020.”

The next step is a Request for Proposals to shortlist qualified consortia (groups of affiliated companies) that bid on the project. That stage is expected to take three months.

Keep up-to-date on the Valley Line LRT here or sign up for email updates.

Province to Edmonton’s City Council: “You’ll like the 2014 budget…just kidding!”

Things were looking up for LRT expansion in Edmonton. As recently as a few weeks ago, Mayor Iveson sounded optimistic that the Province was going to provide money for LRT. Other members of City Council had also received positive indications from the Province. But talk is cheap, and the Province didn’t follow through with today’s budget, as Mayor Iveson made clear:

“Not in a position to celebrate anything today at this point. Little bit of disappointment that yesterday’s message and really the message our Council has been consistent about since last year hasn’t quite gotten through yet.”

The Province unveiled its 2014 Budget this afternoon, saying it “delivers the core services Albertans expect, makes strategic investments in innovation to improve the lives of Albertans today and into the future, and strengthens new and existing infrastructure to address the demands of our growing province and economy.” Unfortunately, LRT was not deemed a priority as evidenced by the complete lack of commitment to funding its ongoing expansion in Edmonton and Calgary.

The original GreenTRIP fund of $2 billion, created by the Stelmach government in 2008, has not been increased. MSI funding increased slightly, but not nearly enough to fund the LRT expansion to Mill Woods. Besides, as Mayor Iveson again pointed out today, Edmonton has a need for LRT funding on top of all the things that MSI funding is used for in other municipalities – building libraries, recreation centres, etc. The lack of increase in GreenTRIP funding was especially disappointing to the mayor:

“My interpretation of long-term commitment to GreenTRIP isn’t just saying we’re going to roll out all the money we announced serveral years ago by 2019 and announce this year’s money like its new when its actually money that we’re putting into the NAIT line today because its money that was announced previously.”

He clarified yet again what a long-term commitment would look like:

“For me, a long-term commitment to transit would be an open-ended or ten year commitment to sustained levels of funding for rapid transit expansion in our province.”

The reaction from local leaders was disappointment, as expected. “There’s no new commitment to transit here,” Mayor Iveson said.

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There are two key risks the City faces by not receiving funding for LRT expansion from the Province. The first risk is that we miss yet another construction season, which could add around $65 million to the total cost of the project. The City has a deadline of April 30 to try to get all of the necessary funding in place. If that date isn’t met, then the completion of the Southeast LRT expansion by 2019 is in jeopardy.

The second risk is that the federal funding Edmonton has applied for under the P3 Canada program could be at risk if construction doesn’t begin by the end of 2015. “There is a timeline on the P3 grant,” Mayor Iveson said. “If we were to lose another year, then we would potentially begin to lose some of the federal funding, and then we’d really lose momentum.”

Mayor Don Iveson

But the biggest issue here is that the Province made noise about a long-term commitment to LRT, and simply hasn’t delivered. Mayor Iveson expressed his frustration with this:

“Frankly I received a lot of mixed messages from the Province over the last six to eight weeks, that we’d be happy, that we should manage our expectations, that we’d be satisfied, that we’re asking for too much, and often from the same people, so that is a frustration.”

Still he tried to remain optimistic, adding, “that just tells me that things are fluid still.”

You can listen to Mayor Iveson’s full remarks here:

If there wasn’t already a trust issue between City Council and the Province, there most certainly is now. Conversations can only be considered productive if they actually lead to an outcome that all sides are happy with. If the Province wasn’t prepared to make a commitment now, they should have made that clear to the mayor and the rest of Council.

Asked what he thought about his first provincial budget experience since taking office, Mayor Iveson sighed audibly. “That’s what I think,” he said. Ever the optimist, he said he remained dedicated to working with the Province to find a positive outcome for the city. “I think they’ve figured out in the last 24 hours that we really mean it, this is really important to us.”

You can read more about the Province’s Budget 2014 here.

Should MSI funding be used for Edmonton’s downtown arena?

Even if you’re optimistic and think the Katz Group and the City can resolve their current differences, let’s not forget that the arena project is short at least $100 million. Under the current agreement, that amount is slated to come from “other orders of government” such as the province. Over the last year or so, various ministers have stated that the province will not be providing any new funding for the arena. In May, Municipal Affairs Minister Doug Griffiths said:

“The province is not going to write a separate cheque for a particular project. We provide MSI funding for every municipality in the province, which is $896 million this year. We have proposed that’s going to increase. The reason why we do so is municipalities can choose what their priorities are.”

While the downtown arena project would certainly be eligible under the Municipal Sustainability Initiative (MSI), I have long wondered if it would really make sense to use our limited funding for that purpose. How much MSI funding do we have? What have we already spent? Can we really count on an increase? These are some of the question I’ll explore below.

What is the Municipal Sustainability Initiative (MSI)?

MSI is a way for the province to provide cities, towns, and other municipalities in the province with funding for infrastructure projects. From the MSI website:

In 2007, the $11.3 billion MSI program was announced to provide predictable, sustainable funding for our province’s municipal infrastructure projects to keep our municipalities strong.

The objectives of the program are:

  • To work in partnership with municipalities to manage growth pressures;
  • To provide municipalities with sustainable funding; and
  • To support infrastructure needs.

All eligible municipalities in the province receive an amount each year that is calculated based on the following formula:

  • 48% is allocated on a per capita basis;
  • 48% is allocated based on education property tax requisitions;
  • 4% is allocated based on kilometers of local roads.

A wide range of municipal projects are eligible for MSI funding, which means that each municipality can decide where the money is best spent.

How much MSI funding will the City of Edmonton receive?

Edmonton is slated to receive a total of $2.1 billion by the end of 2021. From 2007 through 2011, we received about $567 million. In order to take advantage of favorable economic conditions, Council also decided to fast-track another $250 million or so, which means we have used roughly $850 million in MSI funding already. This chart shows the amount of funding per year (with FT designating the fast-tracked amount):

That means we have roughly $1.3 billion still to come over the next ten years. The projected amounts for 2012-2021 take into consideration repayments on the fast-tracked amount. The City’s fast-tracking strategy requires an annual repayment of $57 million, including interest for five years, reducing the amount of MSI available in 2012-2016 by $285 million.

What have we spent our funding on so far?

The MSI website provides a list of accepted projects by year for each municipality in PDF. I extracted the data for Edmonton, and organized it in a spreadsheet. Based on the description, I categorized each project as either “new” or “existing” to indicate whether it was for a new asset or to rehabilitate/upgrade/repair an existing one. I also assigned each project a category such as “Parks” or “Transit”. Here’s what we have spent per year:

The total spent is roughly $850 million. The big jump in 2009 was the fast-tracked funding, which allowed us to take advantage of lower construction costs.

Here’s the breakdown of new vs. existing:

As you can see, roughly 53% of our MSI funding has been spent on “new” projects.

Here’s the breakdown by category:

The bulk of our MSI funding has been spent on transit and roads. Parks and recreation facilities are the only other two categories that have received more than $100 million in funding.

A total of 82 capital projects were listed, with an average project cost of $9.9 million. No project has cost more than $100 million. The largest project we have constructed so far was the new Centennial Garage in southwest Edmonton, which had a total project cost of $99 million ($89.3 million of which came from MSI). It would be fair to call that project an anomaly however – only one other project, to rehabilitate several roads for $61 million, came with a price tag greater than $40 million.

Can we count on an MSI increase in the future?

MSI funding has always been tied to the economy. The amount allocated to municipalities over the first five years of the program was reduced due to weaker than anticipated revenues. The City of Edmonton had expected to receive $802 million over the 2007-2011 period, about $235 million more than the $567 million it ended up receiving. That does not bode well for an increase in the future.

Both Calgary and Edmonton have been pushing for an improved funding framework with the commitment to develop a big city charter. The outcome of that initiative, slated to be considered by the Legislature in the spring, could impact the way Edmonton receives funding from the province.

Should we use MSI funding for the arena?

According to the City, the average age of Edmonton’s infrastructure assets is 30 years. At the end of 2011, more than 150 neighbourhoods required renewal. An average annual reinvestment of $400 million over the next three years, plus an average annual reinvestment of $450 million over the 2015-2021 period, is the minimum amount of funding required to renew Edmonton’s existing infrastructure to achieve a reasonable state of repair. This is a big challenge, and MSI funding provides only a piece of the pie.

As shown above, our MSI spend has been more or less equally split between new projects and upgrades or rehabilitation of existing assets. A total of $87.5 million was spent on seven new recreation facilities (either brand new, or additions to existing) from 2007 through 2011. Would we have rather spent all of that on the arena? A number of new projects would need to be postponed if funding was allocated instead to the arena. A total of $384.8 million was approved by Council for recreation and cultural projects in the 2012-2014 Capital Budget.

In a poll earlier this year, two-thirds of Edmontonians opposed provincial funding going toward the new arena. An equal number supported fast-tracking the southeast LRT line to Mill Woods. It would seem that the use of MSI funding thus far more or less aligns with the desires of Edmontonians, with the largest share going toward transit projects (though not all of that was LRT-related).

This decision would ultimately need to be made by City Council, and as we approach an election next year, I’m not sure many councillors would be willing to take money away from important neighbourhood renewal projects or new facilities like libraries and parks for the arena.