Capital Budget Disclosures Negatively Impacting Procurement Processes
IT IS THEREFORE RESOLVED THAT Alberta Municipalities advocate to the Government of Alberta for amendments to Part 8 of the MGA to provide that detailed phasing and costing of projects are protected information from disclosure in public budget documents and off-site levy bylaw requirements until after those projects have been awarded under the applicable procurement process.
WHEREAS Part 8 of the Municipal Government Act (MGA) outlines the framework local councils and administrations must operate within when managing the finances of a municipality;
WHEREAS municipalities must follow specific requirements regarding budgets, borrowing, investing, corporate planning and financial reporting, and off-site levy requirements, and that same information and deliberations must be provided to the public;
WHEREAS the procurement and tendering process is a regimented and highly competitive process;
WHEREAS the costing and phasing of municipal project details provided as part of municipal budgets negatively impacts the results of open, competitive procurement processes; and
WHEREAS inflation, shortages of skilled trades and supplies have increased the pressures in budgeting and procurement processes.
Section 283.1 of the MGA states that each municipality must prepare a written plan respecting its anticipated financial operations over a period of at least the next three financial years and respecting its anticipated capital property additions over a period of at least the next five financial years. A municipality may only authorize expenditures that are included in the budget, are for an emergency, are legally required or are otherwise authorized by council.
Municipal operating and capital budgets are one of the most important policy decisions of council. The budget determines the programs and services that the municipality will provide to residents. The inability to keep phasing and design information for municipal projects protected until the procurement process is complete affects all municipalities across the Province. Escalating costs due to inflation, materials, skilled trades, and suppliers has magnified the negative impact of being unable to negotiate or award projects on a level playing field. Companies or firms submitting bids or tenders for municipal procurements have detailed financial information that no other private company or individual would be subject to divulging. To protect taxpayers, this amendment should be prioritized as these financial impacts will increase and be experienced on all local government projects.
Recent tendering results submitted to the Town of Okotoks have highlighted the trend for submissions to exactly match detailed budget documents contained in off-site levy and budget approval documents.
In December 2023, the Minister of Municipal Affairs communicated by letter that concerns from municipalities likely stem from how one interprets section 246 of the MGA. The MGA does not prescribe the level of detail required in budgets or plans. If a municipality adopts the capital budget publicly with the required content, the requirements in the MGA would be deemed to be met.
ABmunis’ Rating of the Government’s Response
Intent partially met – further action will be taken at a medium level of engagement.
The Minister suggests that municipalities can pass budgets now without releasing budget data that will influence tendering processes. ABmunis approached Municipal Affairs administration for example practices but no further insights were provided. ABmunis plans to consult with the Government Finance Officers Association of Alberta and specific members for potential best practices on how to find a balance between presenting budget information in a transparent manner without releasing information that will influence tendering outcomes.