The Alberta NDP is calling on the provincial government to reverse a decision to raise property taxes for Albertans by increasing municipal borrowing costs.
According to an Alberta Treasury and Finance memo shared by the NDP, the provincial government said it would add a premium of 0.5% to 0.75% to local authority borrowing rates. from December.
“Historically, loans have been given to local authorities with low interest rates and other generous terms by the government,” the memo reads.
“Alberta can no longer afford to continue lending money to local authorities below market rates.”
The NDP said at a news conference from Red Deer City Hall on Tuesday that the new borrowing rate is expected to add millions of dollars in interest payments to municipal projects. It also comes as the UCP announced in this year’s budget that it was cutting municipal infrastructure spending by $1 billion.
The NDP says the cuts, coupled with higher interest rates, mean local authorities will have to borrow more money and pay more interest to keep building infrastructure projects.
“Albertans are already struggling to make ends meet as they pay more income tax, more property tax, more tuition, more tuition, more interest on student debt, more camping fees, more for auto insurance and more for utilities,” the NDP said. Municipal Affairs Critic Joe Ceci.
“Increasing borrowing rates for municipalities will further pass costs onto Albertans and make monthly bills even more painful.”
Due to the size and security of the Alberta government, the province can borrow money for capital projects at a better rate than a city, town or county. The province would then lend money to local authorities at the same low rate it receives from the capital markets.
However, the province now claims it cannot afford to continue offering Alberta’s borrowing rate to municipalities, even though Alberta expects strong resource revenues this year.
“That extra money will come directly from property taxpayers through higher property taxes,” Ceci added. “It is wrong for the UCP to take money away from Alberta families and small businesses like this and this decision must be reversed immediately.”
The province noted in the memo that it will continue to lend money to municipalities.
“For most borrowers, rates and other terms, such as the ability to borrow at fixed rates for periods longer than five years, will continue to be attractive relative to other methods of borrowing,” it read.
“Due to the pandemic and other fiscal and economic impacts over the past several years, Alberta’s debt has increased significantly and the Alberta Local Authority Loan Program is funded by provincial borrowing. This change will ensure the sustainability of the program in the future.