Legal Studies 479
Local Government Law in Alberta (OCW)

 

Legal Studies 479
Local Government Law in Alberta (OCW)

Legal Studies 479

Unit 4: Municipal Finances

4.1  Responsibilities

4.1.1  Minister

Although municipalities exercise a great deal of control over their finances, it is apparent from a review of the Act that the Minister of Municipal Affairs has a great deal of power and can exercise a broad supervisory jurisdiction over municipalities in relation to their finances.

Through the ability to set regulations, the Minister has the power to

  • spread expenditures to cover a deficiency over more than one calendar year [section 244(2)];
  • establish a budget for a municipality that has a deficit [section 244(3)];
  • authorize an expenditure that is not set out in a budget (section 248);
  • approve municipal investments or authorize the investment of municipal monies in other investments (section 250);
  • authorize municipal borrowing in excess of the municipality’s debt limit (section 252);
  • exempt a municipality from any requirement under sections 256 to 263 (borrowing);
  • authorize a municipality to make a loan or guarantee in excess of its debt limit (section 268);
  • make regulations:
    • respecting the financial administration of specialized municipalities;
    • establishing limits and restrictions on a municipality’s power to make grants;
    • respecting how a debt limit for a municipality is determined;
    • defining debt for the purposes of determining if a municipality has exceeded its debt limit, and the definition may include anything related to a municipality’s finances, including things relating to the finances of a controlled corporation;
    • exempting a municipality from the requirement of this Part respecting debt limits. (section 271)
  • establish accounting principles or standards for municipal annual financial statements [section 276(1)];
  • establish requirements for financial information return, including accounting principles or standards [section 277(1)]; and
  • establish forms for the municipal annual audits [section 281(2)].

In addition to the above powers, the Minister exercises almost ultimate financial control of a municipality by virtue of his ability to appoint an auditor to review the financial affairs of a municipality.  The Minister is able to appoint an auditor if he, himself, considers the audit needed, or if a council so requests, or not less than one–third of the councillors of that municipality request that the Minister appoint an auditor (section 282).  This is not to say that the Minister is compelled to appoint an auditor upon request.  However, it does show the degree of oversight given to the Minister to ensure that the financial affairs of municipalities are overseen properly.

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Liability of Councillors

Although the Act imposes an obligation on a municipality to establish both operating and capital budgets and to make expenditures in accordance with those budgets, individual councillors are at risk of civil liability if they make expenditures not authorized under section 248 (operating budget, capital budget or interim budget); vote to spend borrowed money; or grant money for a purpose other than that for which it is borrowed or granted (section 249).  The financial obligations are so serious in the Act that the municipality, an elector or a taxpayer of the municipality, or a person who holds a security under a borrowing made by the municipality, can take civil action against a councillor. 

In the same way, a municipality cannot borrow, make a loan, or guarantee the repayment of a loan that causes the municipality to exceed its debt limit.  However, a councillor who votes for the bylaw authorizing the borrowing, loan or guarantee is liable to the municipality for the amount borrowed, loaned or guaranteed, unless the borrowing, loan or guarantee has been approved by the Minister (section 275).  As with section 249, the municipality, an elector or taxpayer of the municipality, or the person who holds security under the borrowing, is entitled to enforce the liability.

Although there has been no judicial consideration of these sections, it is arguable that a councillor who is in breach of sections 249 or 275 would not be acting in good faith and, therefore, would not be protected under the indemnity provisions of section 535.

4.1.2  Municipalities

Pursuant to section 3 of the Act, the purpose of a municipality is to provide services, facilities or other things that the municipal council believes is necessary or desirable for all or a part of the municipality.  The municipality will, therefore, establish the programs to provide services to its citizens and determine what infrastructure is necessary to provide the facilities it requires.  It would be fair to say that almost everything a municipality does or constructs costs money.  Therefore, the task that falls upon the municipality is to determine how to fund those services and facilities, recognizing the limits to funding imposed upon municipalities by the Act

The obligations of a municipality in relation to its financial matters are found in the Act at Part 8—Financial Administration.  As stated above, however, the provisions of the Act, itself, are only the starting point in relation to the financial administration of a municipality.  Unlike other areas of the Act, where the statutory provisions set out the entire scope of the regulatory scheme, in the area of financial administration, the municipal administrator must be aware of the plethora of regulations that govern municipalities, which are set out as follows:

Apex Plus Investment Regulation, Alta Reg 210/2006

Business Tax Exemption (Legislative Assembly Office) Regulation, Alta Reg 344/2009

Community Aggregate Payment Levy Regulation, Alta Reg 263/2005

Community Organization Property Tax Exemption Regulation, Alta Reg 281/1998

Control of Corporations Regulation, Alta Reg 284/2003

Debt Limit Regulation, Alta Reg 255/2000

Equalized Assessment Variance Regulation, 2010 Alta Reg 315/2009

Extension of Linear Property Regulation, Alta Reg 159/2010

Financial Information Return Regulation, Alta Reg 158/2000

Investment Regulation, Alta Reg 66/2000

Major Cities Investment Regulation, Alta Reg 249/2000

Muni Funds Investment Regulation, Alta Reg 22/2010

Municipal Finance Clarification Regulation, Alta Reg 191/2010

Qualifications of Assessor Regulation, Alta Reg 233/2005

Regional Services Commission Debt Limit Regulation, Alta Reg 76/2000

Regional Shopping Centre Allocation of Assessment Regulation, Alta Reg 235/2006

SuperNet Assessment Regulation, Alta Reg 146/2010

Supplementary Accounting Principles and Standards and Standards Regulation, Alta Reg 313/2000

Well Drilling Equipment Tax Rate Regulation, Alta Reg 221/2010

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