Estimates for 2022 Municipal Sustainability Initiative are Now Available

The Government of Alberta recently released the estimated allocations for each municipality’s 2022 and 2023 Municipal Sustainability Initiative (MSI) funding. There are three takeaways for municipalities to be aware of when planning your 2022 and 2023 budgets.

Big Reductions in Capital Funding for the Next Two Years

Municipalities will note a significant decrease in next year’s MSI Capital allocation, which is a product of two decisions announced in Alberta’s 2021-22 Budget.

First, the province’s three-year business plan reduced MSI Capital by 25 per cent from $963 million in 2020 to an average of $722 million per year between 2021 and 2023. Over the three-year period, this 25 per cent reduction totals $723 million ($963M less $722M x 3 years) in reduced investment in community infrastructure.

Second, the Government of Alberta decided to front-load the majority of the three-year MSI Capital funding in 2021. Of the three-year total of $2.166 billion ($722M x 3 years) in MSI Capital, $1.196 billion was delivered in 2021 – leaving $485 million in be allocated in 2022 and 2023. The three-year funding still totals $2.166 billion, but the change between 2021 and 2022 represents a 59 per cent decline in the MSI Capital funding pool.

Every Municipality Will Take an Equal Cut

Historically, the allocation formulas for MSI and the Basic Municipal Transportation Grant (BMTG) would determine each municipality’s funding. When the MSI funding pool increased or decreased, each municipality may have experienced a higher or lower change compared to other municipalities. However, in 2022 and 2023, due to the 59 per cent reduction in the funding pool and complexities of the allocation formulas, Alberta Municipal Affairs has opted to reduce every municipality’s allocation by the same percentage. This means that each municipality’s 2022 and 2023 MSI Capital allocations are expected to be 40.6 per cent of your 2021 MSI Capital allocation.

MSI Operating Remains Unchanged

The total budget for MSI Operating is forecasted to remain at $30 million in 2022 and 2023, and the province plans to maintain each municipality’s MSI Operating allocation at the same amount it received in 2021.

AUMA Continues to Seek Change

AUMA remains very concerned about the long-term impacts resulting from the province’s decisions to cut capital funding for community infrastructure. AUMA members made it clear at our Spring 2021 Municipal Leaders’ Caucus that the Local Government Fiscal Framework needs to be improved before it replaces MSI in 2024. We continue to engage the Minister of Municipal Affairs to seek changes to ensure future funding will meet the needs of Alberta’s communities, which includes a formula that allocates funding fairly and equitably to all municipalities.

Note: All references to MSI Capital represent the combination of the MSI Capital and BMTG portions.