TAMRMS#: B06
5.1
Information Item Only
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Government of Alberta 2025 Budget Analysis
Presented by: Monty Killoh, Government Relations Advisor, Government/Indigenous Relations & Environment
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SUMMARY
This report reviews impacts and opportunities for the City of St. Albert related to the Government of Alberta’s 2025-2028 Budget that was tabled on February 27, 2025, titled “Meeting the Challenge.”
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
N/A
BACKGROUND AND DISCUSSION
On February 27, 2025, the Government of Alberta tabled its 2025-2028 Budget titled “Meeting the Challenge” (within this report, it will be referred to as “Budget 2025”). More details on initiatives and funding announcements within the budget will become available over the following weeks as part of the Budget roll-out process.
Background
Partnership and collaboration across all orders of government is a core aspect of delivering the services needed by residents and businesses. Municipalities play a critical role in the direct provision of many public services and construction and maintenance of public infrastructure.
At the same time, municipalities primarily rely on property taxes, user fees, and grants (government transfers) to fund the delivery of these services and infrastructure. Therefore, grants/government transfers play a vital role in allowing municipalities to fulfill their mandate and satisfy the expectations of their stakeholders in the delivery of infrastructure and services. Provincial budgets provide an overview of the degree of such grants/transfers municipalities can expect to receive over the following year. As such, each budget can pose significant impacts to the sustainability of delivering services and infrastructure.
Various factors influence the budget, from economic conditions to political objectives to international influence. A central factor influencing Budget 2025 is the potential of U.S. tariffs on Canadian exports to disrupt Alberta’s economy, and the resulting economic uncertainties. For example, the Province has allocated nearly $4 billion in its contingency fund to address related issues, which is about twice the amount it allocated to the contingency fund in the previous year’s budget.
The Government of Alberta’s Budget 2025 projects $79.3 billion in expenses and $74.1 Billion in revenue, resulting in a projected deficit of $5.2 billion. Due to the uncertainties regarding the potential impacts of tariffs on government revenues and expenses, the Province has stated that this deficit could grow to over $8.7 billion in a worst-case tariff scenario.
Budget 2025 is largely built upon the following key themes:
• Income Tax Cut
• Strengthening Healthcare
• Investing in K-12 Education
• Meeting the Challenge (supporting a strong workforce, building communities, securing Alberta’s borders)
High-Level Summary of Impacts to City of St. Albert
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Successes |
Challenges |
Future Opportunities |
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Ray Gibbon Drive cost-sharing agreement fully-funded through 2028. |
Increase of Education Property Tax rates. |
Affordable Housing, given increased funding envelope. |
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Restoration of Grants in Place of Taxes to pre-2021 rates. |
Removal of exploring Education Property Tax Reform as an alternative revenue stream for municipalities. |
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Increase in funding for Affordable Housing programs. |
No increases to FCSS and Library Board funding. |
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New K-9 School in Cherot |
Cancellation of Local Growth & Sustainability Grant program. |
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Municipal / City of St. Albert Items of Note within Budget 2025
1. Ray Gibbon Drive Funding
a. $25 million has been allocated for 2025-26, with a further $6 million in 2026-27 and $1 million in 2027-28, bringing the total committed funding to $32 million, which matches the renewed cost-sharing agreement.
2. New School Construction Funding
a. Budget 2025 allocated $789 million for the construction of new schools.
b. Included in this funding envelope is planning funding for a new K-9 Public School in Chérot.
3. Education Property Tax
a. The province is raising Education Property Tax rates, with the goal of the tax funding 33% of Education’s operating costs within the next few years (in 2024, it covered 29.5% of these cost, and will cover 31.6% in 2025).
b. As a result of this increase and assessment growth, St. Albert’s Education Property Tax requisition that it collects from property owners on behalf of the Province is increasing to $42,368,481 in 2025 from $38,198,621.
i. For each $100,000 in assessed value, this would equate to an $17/year increase.
4. Local Government Fiscal Framework (LGFF)
a. LGFF funding is tied to changes in provincial revenues from three years prior - as such, LGFF funding is increasing by 13% over its 2024 funding levels to match provincial revenues increasing by that same amount between 2021-22 and 2022-23.
b. St. Albert has been allocated $9.2 million for 2025, and a nearly identical amount for 2026.
5. Local Growth and Sustainability Grant
a. The Mid-Sized Cities Mayors’ Caucus advocated to the Province for a fund of this kind to be established to support growth infrastructure projects in mid-sized cities, and this program was the Province’s response, with over $60 million in funding allocated over 3 years in Budget 2024.
b. In Budget 2025, the Province has effectively cancelled this program, by removing future allocations of $20 million per year, leaving only the $20 million allocated in Budget 2024 for applications submitted to this program in late 2024.
6. The City of St. Albert submitted an application to this program for the Lakeview Business District in November 2024 and recently received notice that the application was unsuccessful.
7. Grants in Place of Taxes (GIPOT)
a. Properties belonging to the Province are exempt from municipal taxation; the Province provides yearly grants to municipalities to help cover this lost revenue. In 2021, this grant received a 50% funding reduction, which resulted in an approximate $80 thousand loss of yearly revenue to the City.
b. Through Budget 2025, the Province announced that GIPOT will be restored to its original funding levels, with a 75% restoration in 2025 and a 100% restoration in 2026.
c. This will result in approximately $40 thousand of additional restored revenue for the City in 2025, which will increase to approximately $80 thousand in 2026.
8. Affordable Housing
a. $641.2 million has been allocated for affordable housing construction, renovation, maintenance, and operation, which is an increase of $166.5 million compared to what Budget 2024 had allocated this line-item for 2025 last year.
b. Funding for the Affordable Housing Partnership Program has also grown from $139 million allocated for 2025 in Budget 2024 to $157 million in Budget 2025.
9. FCSS, Culture, and Recreation Funding
a. FCSS funding remains static at $105 million for 2025, which is challenging given inflationary economic pressures; if FCSS funding were to have increased with population growth and inflation since 2016, it would be funded at $160 million.
b. Library operating grant funding also remains static at $33.6 million.
c. Funding for the Alberta Foundation for the Arts has increased from $30.1 million in 2024 to $34.6 million in 2025 - this program has supported numerous cultural initiatives in St. Albert, from Public Library events to the yearly International Children’s Festival of the Arts.
10. Other Items of Note
a. Budgetary Deficit
i. Given the province’s fiscal framework that allows it to allocate up to 50% of a budgetary surplus to one-time capital spending initiatives, it should be expected that the current fiscal forecast of consecutive deficits over the following few years means there may be less opportunities for the City to obtain one-time spending allocations on capital projects, such as what it received from the Province for Ray Gibbon Drive.
b. Low-Income Transit Pass
i. The Budget has funded the City’s Low-Income Transit Pass program for 2025.
c. Fine Revenue
i. Given the Province’s recent action to greatly reduce the ability of municipalities to utilize automated traffic enforcement, it is expecting a decrease of $17 million in fine revenue in 2025 compared to its Budget 2024 forecast.
ii. Given that the province allocates a portion of fine revenue to support municipal policing, a reduction in funding received through this revenue-sharing program is expected.
d. Emergency Medical Service (EMS)
i. The province has allocated $40 million in new funding for the EMS Vehicles Capital Program, which will work to increase emergency vehicle capacity across the province.
ii. The City may be eligible to receive a portion of this funding for its emergency vehicle fleet.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
Prior to Budget 2025 being tabled, the City engaged with relevant Provincial Ministries with regards to City Council’s priorities.
The City remains well-positioned to work with the Government of Alberta, particularly in the realms of Economic Prosperity, Community Well-Being/Housing, and Financial Sustainability.
Given the unknown impacts of international trade policies on the provincial economy, combined with statements from the Province that aspects of the budget may undergo changes to properly react to such impacts, Administration will continue to monitor any municipal impacts and opportunities to advance Council’s priorities.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Initiative aligned with Strategic Plan:
Advance Mixed Market Housing Development
Support development of mixed housing choices including market, attainable, and transitional housing types. This strategy includes advancing development on 22 St. Thomas Street and youth transitional housing.
Initiative aligned with Strategic Plan:
Lakeview Business District Servicing
Expand opportunities for employment and economic growth with land development that attracts a mix of industries and businesses. This strategy includes advancing the development of Lakeview Business District and completing the plans for the recently annexed lands.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
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Report Date: April 8, 2025
Author(s): Monty Killoh
Department: Government/Indigenous Relations & Environment
Department Director: Trevor Duley
Chief Administrative Officer: William Fletcher