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Infrastructure investment gets mixed reaction

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by Richard Gilbert

While the Alberta Budget’s investment in basic infrastructure was applauded by the construction industry, the City of Calgary is concerned about what it means for municipal projects.

Alberta Budget 2010

While the Alberta Budget’s investment in basic infrastructure was applauded by the construction industry, the City of Calgary is concerned about what it means for municipal projects.

“On balance for the construction industry this is a good news budget,” said Bill Stewart, vice president of Merit Alberta. “We did pick up a bit of a hair cut in infrastructure spending from about $8 billion in the previous plan to $7.2 billion. But we are still happy with that number, because they will try to sustain as much infrastructure spending as possible.”

Finance Minister Ted Morton released the budget on Feb. 9, with adjustments being made for a second year in a row due to the ongoing recession and an increasing deficit.

In addition to the more than $7 billion for capital projects in 2010-11, more than $20 billion has been earmarked for the following three years.

The four year capital plan includes a $3.1 billion drop in total investment, but the revised dollar figures still met with the approval of the construction industry.

“In the past, infrastructure has always taken a bite during a recession,” said Stewart. “It always seemed that infrastructure was the easiest and the first to cut. But, this budget does not do that.”

Others agree.

“From the perspective of the building trades, we are pleased with the budget and that infrastructure spending will continue,” said Building Trades Alberta executive director Ron Harry.

“We are pleased to see there were not any tax increases, which will assist in moving construction and infrastructure projects forward.”

The current capital plan is aimed at completing previously announced projects.

The government estimates that 70,000 jobs will be created this year alone.

Apprenticeship opportunities associated with the job creation are significant to some.

“It is important to continue to have apprenticeship seats available during an economic correction,” said Harry.

“Spending on advanced education remains as it is, because it helps support the apprenticeship system.”

However, not everyone is happy.

Several infrastructure projects in Calgary may have to be postponed.

The city was expecting to receive $400 million from the Municipal Sustainability Initiative (MSI), but only got $254 million.

“When the rug is pulled out from under your feet and you’ve made commitments, it goes right to the core and that’s a problem,” said Calgary Alderman Ric McIver.

The city has already signed contracts for the construction of the west leg of the LRT, road improvements and recreation facilities. The provincial government had already signed agreements with the city to fund these projects.

The funding reduction was unwelcome, but not unexpected.

“This is not a total surprise, because the government has been hinting for months at a 20-25 per cent cut,” he said.

“The MSI was the beginning of a long-term infrastructure fund, but we didn’t make it through the first half of the plan without a change.” The MSI budget jumped by $139 million over last year, but it was considerably less than expected.

“Really, the whole idea of the MSI was to smooth out spending and provide a predictability for spending,” said McIver.

“We need to do some analysis to see what type of financial bind we are in. We will have to prioritize the projects that are already in the hopper and compare these with the projects that we have contracts for and are committed to.”

He said projects such as the $22-million Peace Bridge might have to be postponed.

Calgary’s Mayor Dave Bronconnier is also upset about the new budget and said that legal action may be considered, if a resolution can’t be worked out with the provincial government.

The Alberta government will continue spending on roadways, schools, health and water treatment facilities.

It will spend $1.9 billion on transportation projects, such as the northwest segment of the Edmonton Anthony Henday ring road and the Calgary Stoney Trail ring road.

Budget 2010 forecasts a deficit of $4.7 billion for 2010-2011, $1.1 billion in 2011-2012 and a return to a balanced budget with a modest surplus of $505 million for 2012-13.

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Where the money is going

Infrastructure remains a priority for the Alberta government.

It plans to spend $1.6 billion on municipal infrastructure projects in 2010-11.

About 360 municipalities are forecast to receive at least $1.2 billion for more than 2,200 active capital projects.

This funding will cover construction or the rehabilitation of roads and bridges, as well as work on water, sewer and storm drainage lines.

Notable projects include LRT extensions in Edmonton and Calgary, and some 65 resource road projects.

The government has set aside about $1.9 billion for transportation corridors this year.

The northwest segment of the Edmonton Anthony Henday ring road and the Calgary Stoney Trail ring road, are scheduled to be completed in fall 2011 and 2013 respectively.

The government plans to spend $718 million on schools, which includes the construction of 10 new facilities, eight additions and replacements, and the modernization of 24 more.

Phase Two of the Alberta Schools Alternative Procurement project will move forward, with a design-build contract in place and detailed design work started on high schools in Calgary, Edmonton, Sherwood Park and Spruce Grove.

Work on another 10 elementary and middle schools in Edmonton, Calgary, Langdon and Okotoks is expected to begin in spring 2010.

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