Alberta Budget 2026 Resolves Seven-Year Grant Funding Dispute with Edmonton
In a significant move for municipal-provincial relations, Alberta's 2026 budget has fully restored grant funding to the City of Edmonton, marking the first time since 2019 that the province will pay these grants at one hundred per cent. This decision concludes a protracted seven-year conflict between city hall and the legislature over these crucial financial allocations.
A Non-Negotiable Priority for Premier Smith
Finance Minister Nate Horner emphasized that restoring the grants to their full amount was an absolute requirement for Premier Danielle Smith, even as the province operates under a deficit budget. "It was very important to the premier," Horner stated. "She's been in consultation with, obviously, the large city mayors, but also municipalities across the province. And it was something that was important to her."
Horner further explained that Smith viewed the previous reductions as unfair and was determined to correct the situation. "She felt that it was unfair the way we'd gone about in the past, and wanted to rectify it," he added.
Historical Context of the Funding Cuts
The dispute over these grants began seven years ago when the province initiated cuts. In the 2019-20 fiscal year, the grants were reduced by twenty-five per cent, followed by another quarter reduction the subsequent year. By 2021, the funding had been halved compared to pre-2019 levels.
These cuts had substantial financial implications for Edmonton. In 2024, then-mayor Amarjeet Sohi launched a campaign urging the province to reinstate full funding, highlighting that the reductions had cost the city approximately eighty million dollars over several years, equating to roughly sixteen million dollars in lost revenue annually.
Municipal Pressure and Provincial Response
Alberta Municipalities passed a resolution in 2024, pressuring the provincial government to restore the funding. The resolution argued that the cuts effectively transferred costs to local ratepayers, who had to compensate for the grant shortfall through higher taxes. "This change in funding has effectively downloaded costs to the ratepayers within the municipalities," the resolution read. "This gap in provincial funding points to the need for the province to recognize the essential role that the day-to-day municipal services play in supporting provincial building and properties."
At a 2024 conference of municipal leaders, Premier Smith addressed the issue, noting that she was not involved in the original decision to cut the grants, which occurred under former Premier Jason Kenney. "I wasn't part of the decision-making around that," she said at the time. "We're committed to looking at that."
Understanding Grants in Place of Taxes
Grants in place of taxes are a critical component of municipal financing in Alberta. Under the Municipal Government Act, the provincial government is exempt from paying municipal property taxes, as cities are subordinate to the province. To compensate municipalities for this exemption, Alberta has established a program that provides grants to cities, ensuring they are not financially disadvantaged by the province's tax-exempt status.
The restoration of these grants to full funding in the 2026 budget represents a pivotal step in mending the relationship between Edmonton and the provincial government, addressing long-standing grievances and providing much-needed financial stability for the city.
