February 27, 2025
Dear Chief Elected Officials:
I am writing to share information with you about Budget 2025, tabled in the Alberta Legislature by my colleague, the Honourable Nate Horner, President of Treasury Board and Minister of Finance. Below are some details relevant to Alberta Municipal Affairs.
Budget 2025 is meeting the challenges facing Alberta with responsible decisions to fund today’s priorities, investing more than $1 billion to build stronger communities provincewide. Through these investments, my ministry will continue to support local governments in providing fiscally responsible, collaborative, and accountable services to Albertans.
Last year, Municipal Affairs introduced the Local Government Fiscal Framework (LGFF), delivering predictable capital infrastructure funding to municipalities and Metis Settlements across Alberta. The LGFF represents years of collaboration between the province and local governments, replacing the Municipal Sustainability Initiative with a modern and predictable model.
LGFF funding allocations for the 2025/26 fiscal year have been known to communities for several months. Thanks to the LGFF’s revenue index factor, which ties the funding level to provincial revenue from three years prior, Budget 2025 increases LGFF capital funding by more than 13 per cent, from $722 million to $820 million. This increase will help your communities achieve their local infrastructure priorities. Budget 2025 also maintains LGFF Operating funding at $60 million to assist with operational costs and help respond to inflationary pressures. This grant was doubled in 2023 to reflect lost municipal revenue through the Grants in Place of Taxes program.
Budget 2025 also increases funding for the Grants in Place of Taxes program (GIPOT). Over the last few years, we heard loud and clear from municipalities that have provincially run buildings within their boundaries about the need for stronger recognition of the impact provincial properties have on municipal services. Starting in the 2025/26 fiscal year, GIPOT will be paid to municipalities at 75 per cent of the property tax amount that would be owed if the properties were subject to municipal taxation. Next year, in 2026/27, GIPOT will be fully restored to 100 per cent.
In light of these increases, the Local Growth and Sustainability Grant (LGSG) program will not continue. Introduced in Budget 2024, this three-year, $60-million grant program aimed to alleviate pressures in fast-growing communities. We received numerous applications from municipalities for the initial $20 million in LGSG funding allocated in 2024. Those funds will still be distributed, with successful applicants notified by the end of March 2025. However, after careful consideration, our government made the difficult decision to discontinue the LGSG program for Budget 2025 and focus the investment of taxpayer dollars into other areas, including a comprehensive capital plan to enhance public infrastructure.
As in previous years, Budget 2025 includes capital support through the federal Canada Community-Building Fund and Investing in Canada Infrastructure Program. We are also maintaining funding levels for public libraries, with more than $33 million going toward operating grants across the province.
Budget 2025 is meeting the challenge of the cost of living by helping families keep more money in their pockets through lower personal income taxes and continuing investments in education and health care. Our municipal partners are integral to our work. As we face global uncertainties, I look forward to working together over the next year as we continue to build strong, vibrant, and sustainable communities that help keep our province the best place in Canada to live, work, and raise a family.
Sincerely,
Ric McIver
Minister