Ending homelessness tops Sohi’s wishes for surprise Alberta surplus
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Alberta could end homelessness by using some of the province’s unexpected $3.9 billion year-end surplus, Edmonton Mayor Amarjeet Sohi said.
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The provincial government’s latest fiscal update for 2021-22, released on Tuesday, showed record resource revenues led to a balanced Alberta budget for the first time in seven years. The surplus represents a dramatic turnaround from when the original budget was tabled and when the government projected an $18.2 billion deficit.
This leaves plenty of ideas for what to do with the unexpected money.
In a Thursday interview with Postmedia, Sohi said it’s great news to see the province in better financial shape, but the need for supportive housing is the most pressing issue facing Edmonton.
The city has the lowest per capita support among municipalities that receive provincial funding to address homelessness, Sohi said, adding that he hopes the province fills that gap.
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“The province’s fiscal capacity is now very strong to invest in addressing the homelessness and addictions crisis we face in our city, and we would still have plenty of money for other provincial priorities,” did he declare. .
On Thursday, the city opened one of five new supportive housing sites designed with on-site services to help residents struggling with addictions, mental health issues and other issues.
A total of 210 permanent supportive housing units are expected to complete construction over the next six weeks. The bulk of the funding, $35.1 million, came from the federal government, $28.3 million came from the city, and the province invested $16.4 million in a venue.
Another 243 supportive housing units in three hotel conversion projects are also expected to open this year.
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However, the latest provincial budget did not provide Edmonton with the requested $8.9 million annual operating funding to provide comprehensive supports, including counseling and treatment. That means the nonprofit Homeward Trust will have to cut other unspecified programs to make up for the shortfall, Sohi said.
The cost is also rising, with up to $19 million needed each year by 2024, he added.
“Our homeless population has doubled during the pandemic, and that support has not been adjusted over the past few years.”
On Tuesday, Finance Minister Jason Nixon said the surplus would be spent on things like bolstering the Heritage Savings Fund and paying down debt.
He warned that the government cannot overspend the windfall in order to stay prepared for the future when oil prices are not as high.
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“It’s incumbent on us right now to make sure that we use these resources strategically to help Albertans address these issues right now, particularly around inflation and affordability, but do it in a way that doesn’t not create problems for future governments when these oil and gas prices come back down,” he said.
Sohi acknowledged that resource revenues can be unpredictable, but suggested the province could consider creating an endowment fund that would generate revenue and help municipalities permanently invest in ending homelessness.
He didn’t provide any dollar estimates of what would be needed initially, but noted that investing in housing would result in “tremendous” savings in health care, the justice system and policing.
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“Keeping people homeless costs more than actually investing in treatment, supportive housing and wraparound services,” he said.
Ralph Bucks 2.0?
The province’s windfall comes at a time when Albertans are facing dramatic increases in the cost of living, and the two are closely linked, said University of Calgary economist Trevor Tombe.
“Critically, the exact same reason why inflation is so high is why the government’s budget has improved so much – and that’s the price of oil,” he said.
Similar to Ralph Bucks of 2006 – when Albertans received a one-time $400 check following an oil-fueled surplus – Tombe said today’s government may decide to spend some of its money extra money by writing checks to families to help cover inflationary costs.
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Depending on their annual household income, Albertans pay about $200 to $600 per month more for goods and services due to inflation, Tombe said.
Tombe said $125 a month per family would help ease pain, especially for low-income families, and would be roughly in line with eliminating the GST.
He estimated that such a program would cost the government about $200 million a month, or about one-fifth of the additional, windfall monthly revenue the government receives.
“It’s simple, it can be done quickly, and it doesn’t distort market choices in the same way as, say, suspending the gas tax,” Tombe said.
Personal income tax relief
Others have long called on the UCP to roll back changes to personal taxes.
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In 2019, the UCP government suspended the indexation of personal income tax, which means that the ceiling on non-taxable income does not increase with inflation. At the time, the government estimated it would save $600 million over four years, through the end of the 2022-23 fiscal year.
The NDP and the Canadian Taxpayers Federation (CTF) have called on the government to return to indexing personal income taxes.
The government has promised to resume indexation of the income tax system once it is on better financial footing.
CTF federal director Franco Terrazzano said Thursday with a $3.9 billion surplus that now was the perfect time to deliver while prioritizing debt repayment.
“To the credit of the government, it provided relief through a fuel tax reduction. That’s fine, but the government hasn’t done everything it can,” he said.
