The payments are intended to compensate municipalities for foregone property tax revenue but local leaders say the funding bump in Thursday’s budget is still not enough

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Leaders of Alberta municipalities say they continue to be shortchanged by the provincial government’s Grants in Place of Taxes (GIPOT) program, despite a small funding increase in Thursday’s budget.

By law, properties owned by the Alberta or federal government are exempt from property taxes, though the province attempts to compensate municipalities for their lost revenue through GIPOT.

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“The payment acknowledges that the government of Alberta benefits from municipal services such as roads, snow clearing, transit, and emergency services,” reads the province’s documents regarding the GIPOT plan.

Eligible properties include provincial government office buildings, and also larger facilities including courthouses, schools, and hospitals.

But, since 2019, the province has paid only a fraction of what it owes, said municipal leaders.

In 2019-20, the province reduced GIPOT payments to 75 per cent of the eligible amount. The following year, payments were reduced again to 50 per cent of the eligible amount, where they have remained.

Budget 2024 saw the amount earmarked for GIPOT rise from $36 million in the last fiscal year to $38.1 million for the fiscal year beginning April 1, an increase of 5.8 per cent.

Thursday’s budget calls for further increases of four per cent, up to $39.7 million, and 4.3 per cent, up to $41.4 million in the two years after that.

An ‘ongoing issue’

Edmonton Mayor Amarjeet Sohi told Postmedia in an interview Thursday that he welcomed the increase but said it still wouldn’t be enough.

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“It’s not to the level that we would like to see,” Sohi said, describing GIPOT as an “ongoing issue.”

“That requires more in-depth conversations with the with finance and various ministries, and we will carry on with those conversations.”

Edmonton Coun. Michael Janz has also spoken out against the province not paying up, claiming in a Dec. 7, 2023, editorial that the province has shorted the city some $60 million since 2019.

“We’re not asking for a special deal, just a fair deal,” he wrote, noting the shortfall has to be covered by city taxpayers.

A city official told Postmedia that Edmonton receives about 60 per cent of all GIPOT payments and is home to a majority of provincial government buildings eligible for GIPOT, including the Alberta Legislature and its surrounding buildings as well as the Neil Crawford Provincial Centre.

The city claims the GIPOT shortfall represented an operating revenue loss in 2023 of $13.2 million, equivalent to a 0.7 per cent tax increase, and notes the federal government has continued to pay its grants in full through a roughly similar program known as payments in lieu of taxes.

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‘A fair amount of money’

Grande Prairie Mayor Jackie Clayton told Postmedia that her city received $250,000 annually under the original programming, and that while it’s a small proportion of the municipal budget, she said the funding isn’t insignificant.

“$250,000 is something you can do a lot with,” she said. “Whether it’s funding a community group or wages, it represents a fair amount of money.”

She added Thursday’s funding boost was a “positive sign” but that the province was still coming up short.

“Running a municipality costs more every day and continues to go up.”

Alberta Municipalities president and Wetaskiwin Mayor Tyler Gandam echoed those remarks while speaking at a news conference on Friday.

“They’ve cut that so significantly previously, it’s just starting to move back in the right direction,” he said. “It is nice to see that there is an increase, but it certainly doesn’t get us back to where we were.”

He said municipalities, which are creatures of the province with no constitutional status of their own, are limited in how they can push back.

“It just comes down to advocacy,” he said. “We’re hearing the (provincial) government’s concerns … but they also have to understand the pressures that we have.”

Municipal Affairs Minister Ric McIver was not made available for an interview Thursday or Friday.

A ministry spokesperson sent a statement noting the GIPOT increase in Thursday’s budget as well as a doubling of general operation funding for municipalities, up to $60 million in 2023-24.

“Alberta’s government is creating a responsible plan for a growing province.”

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