GIPOT compensates municipalities for foregone property tax revenue but the province has been paying only half of the eligible amount since 2021
Alberta Premier Danielle Smith said she still needs to know more before restoring funding to the province’s Grants in Place of Taxes (GIPOT) program that municipal leaders say has been shorting them millions of dollars over the past half decade.
Properties owned by the provincial government are exempt from property taxes, and the GIPOT program compensates municipalities for revenue lost as a result.
In 2019-20, the province reduced GIPOT payments to 75 per cent of the eligible amount. The following year, payments were reduced again to 50 per cent of the eligible amount, where they have remained.
At the Alberta Municipalities convention in Red Deer on Thursday, organization president and Wetaskiwin Mayor Tyler Gandam asked Smith about restoring GIPOT in full, saying the cutbacks have placed an “unfair burden” on the bottom line of towns and cities.
“They bear an increased property tax burden to fund these properties while Albertans from other communities use those facilities at no cost,” he said. “Can you explain the hesitation to fully fund the GIPOT program to support municipalities that have provincial facilities?”
Smith told the convention crowd it was something the government would look into but didn’t offer a firm commitment to restore any of the lost funding.
“I wasn’t part of the decision-making around that,” she said. “We’re committed to looking at that.”
“I need to understand the rationale behind it. I need to understand the impact it’s having on each community.”
Her answered largely echoed what she said in response to a question from Edmonton Mayor Amarjeet Sohi at ABMuni’s spring municipal leaders’ caucus in Edmonton last March, where she similarly said she was looking to find out more information about the issue.
On Thursday, Gandam encouraged ABMunis member municipalities to highlight how the shortfall is affecting them.
“This is me asking all of you to find out what the cut in the GIPOT is to your municipality, and make sure you get that information to us.”
Smith encouraged that feedback ahead of the next provincial budget in late February, planning for which is set to get underway soon, Smith said.
“This would be the right time for us to figure out what the cost of that would be.”
Alberta NDP leader Naheed Nenshi addressed the same audience later in the day and drew cheers after remarking that a government run by his party would pay its property taxes.
Then, Sohi welcomed that small bump but said restoring the full funding was key to the city’s finances.
The shortfall continues to affect any municipalities that are home to provincial government buildings, including courthouses, schools and hospitals.
No city is more impacted than Edmonton, which receives about 60 per cent of all GIPOT payments, and is home to a majority of provincial government buildings, including the Alberta Legislature and its surrounding buildings, as well as the Neil Crawford Provincial Centre.
The city has said the shortfall resulted in an operating revenue loss of $13.2 million last year, equivalent to a 0.7 per cent tax increase, and noted the federal government has continued to pay its grants in full through a roughly similar program known as payments in lieu of taxes.