UCP government unveils $1.1B stimulus for municipalities to relieve battered economy

The provincial government has announced a $1.1-billion stimulus program that will aim to create jobs and support municipalities as part of Alberta's recovery plan.

Premier Jason Kenney, Municipal Affairs Minister Kaycee Madu and Transportation Minister Ric McIver made the announcement at a news conference on Tuesday afternoon.

The fund is comprised of $500 million that Kenney said the Alberta government already committed to get "shovel-ready" infrastructure projects underway, and thousands of Albertans working on them.

The remaining $600 million will come from a partnership with the federal government under the Safe Restart Agreement, which Kenney said will help municipalities maintain public services as they work through the COVID-19 crisis.

The agreement sees the province match both $233 million in federal funding to support municipal operating costs, and $70 million to support public transit during the pandemic.

"From Day 1 of the pandemic, I've said that Alberta must protect both lives and livelihoods," Kenney said.

Stimulus figure 'eye-popping,' says Kenney

Acknowledging the stimulus figure is "eye-popping," Kenney said the provincial deficit for the year is expected to come in at more than $20 billion.

"Let's remember that today's deficits are tomorrow's taxes," Kenney said.

"All of this will lead to a great fiscal reckoning. But right now … we must prudently leverage the province's balance sheet."

From February to May, Alberta's unemployment rate doubled — jumping from 7.2 per cent to 15.5 per cent, and remaining at 15.5 per cent in June.

At the conference, Kenney said he expected the unemployment rate to grow "north of 20 per cent."

Without getting people back to work, attracting investment and growing the economy, Alberta's fiscal challenge would be insurmountable, he said.

Kenney also announced that Finance Minister Travis Toews will provide a fiscal update next month.

Pandemic led to heartbreaking decisions, says Nenshi

Calgary Mayor Naheed Nenshi called into the conference to comment on the UCP's stimulus announcement, and called it historic.

"There have been very few great days in the last five months — but today, I think, is indeed a great day," Nenshi said.

"It shows that even as we're facing this global pandemic, even as we're facing the incredible hardship on Alberta citizens and businesses, we're getting through it like we always get through things, and that is: together."

Nenshi said the pandemic has changed the delivery of services in unprecedented ways, which led to the tough decision for the city to accept operating budget support from the province.

"Nobody in Calgary wants to see us run a huge deficit and then have to make that up in the following year — or years — with untenable increases in the unfair, regressive property tax," Nenshi said.

"Or with massive cuts to services, at a time when the economy needs them the most."

Citing layoffs and cancelled transit routes, he said heartbreaking measures had to be taken to cut costs because of COVID-19.

Even with those measures, Calgary is looking at a deficit this year that could approach $400 million.

"I know many, many citizens are in very difficult times," Nenshi said.

"But today's announcement really helps us be able to continue to deliver the services that we need, and to build infrastructure that people really require to create jobs."

Nenshi said during a scrum later in the day that the city is looking at preliminary numbers of $150 million in capital funding, $130 million in operational funding and $70 million for transit.

Conference participants also included Edmonton Mayor Don Iveson; Tanya Thorn, vice-president of the Alberta Urban Municipalities Association; and Al Kemmere, president of the Rural Municipalities of Alberta.

Rough ride for Alberta

The announcement of the stimulus package is the latest development in the UCP's recovery plan that seeks to allay Alberta's fiscal downturn and ballooning unemployment rate.

In late June, Kenney said the province would increase spending on infrastructure projects, cut its corporate tax rate, establish a new investment agency and introduce a series of targeted incentives for industry as part of a plan to restart Alberta's economy.

After a brutal crash in March and April, oil prices rebounded this summer to $40 a barrel, but some companies in the energy sector reported the bump allowed them only to break even or turn a modest profit. 

Retailers across the province have also been hit hard: sales have plunged since March by a staggering $2 billion — roughly 30 per cent.

While some businesses are slowly picking up as the economy reopens, the Retail Council of Canada predicts at least 15 per cent of bricks-and-mortar stores will not survive the pandemic, and the number in Alberta could actually be higher.