Calgary’s Portion of Alberta’s Municipal Debt Reaches 42 Percent

Posted by Alan Zunec on Friday, December 21st, 2012 at 5:23pm.

Of all the debt garnered by Alberta’s far flung towns, cities and counties, Calgary owes the most. The city accounts for 42 percent of provincial debt, with $3.2 billion on the books. All the municipalities together owed some $7.7 billion during 2011, which is higher than the $7.1 billion owed in 2010. Back in 2004 that number was closer to $2.5 billion. That is the first year that the figures were available.

One opinion is that this is a good thing, that it reflects a positive outlook by politicians that are anticipating significant population growth. Others aren’t so sure, citing a possible imbalance of provincial and municipal government resources. The province itself is debt-free, its individual municipalities, in most cases, are not.

Part of the problem is that many municipalities do not have an alternate source of revenue to pay for items that eventually surface, like the construction and maintenance of infrastructure. As far as Calgary goes, this is the case. Councils have sought funding for projects like the tunnel to the airport and the west LRT expansion. A big part of that city’s debt comes from the building of a wastewater treatment plant. Eventually that money will be reclaimed through increases in utility bills and through levies the developer pays.  Calgary owes 59 percent of the debt limit granted by the province. Edmonton’s percentage sits at 48 percent. It owes $2 billion.

Naheed Neshi, the Mayor, notes that the city borrowing is much like a homeowner taking out a mortgage. It is an investment in the future. Neshi notes that he is comfortable with the debt, which will be paid off using grant money and other sources. He is also comfortable borrowing again to improve the city. But Calgary’s part of the money owed to the province is greater than the percentage of Albertans that live in that city, just 29 percent.

But Grande Prairie holds even a bigger debt load. It is up to 75 percent of its debt limit, with borrowing spurred by the oil field boom. In the last ten years the town built a new multiplex, arena, library and police station, all to the tune of $148 million. But before the oil boom there was a span of years when no improvements were made. Grande Prairie is just catching up, noted the city’s finance officer Ken Anderson. He also noted that Grande Prairie’s debt limit should drop to 70 percent by the end of December in 2014.  Anderson pointed out that having the debt, as long as it is balanced and being paid down, is acceptable.

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