Alberta Premier Ed Stelmach and the mayors of the province's two largest cities have reached a deal that they say will provide long-term funding for badly needed infrastructure projects.

Stelmach, who announced the deal Tuesday evening after meeting with the mayors of Edmonton and Calgary, said the province will increase municipal funding to $1.4 billion after four years and maintain that level for the succeeding six years. 

A digital rendering shows the proposed $250 million interchange at 23rd Avenue and Gateway Boulevard.
(City of Edmonton)

In 2006-2007, the province committed $1.1 billion for municipalities, and the 2007-08 budget boosted that amount by only $400 million. The April budget also promised to give municipalities $1.4 billion a year by 2010-11.

Calgary Mayor Dave Bronconnier and Edmonton Mayor Stephen Mandel said the commitment of an extra six years of stable funding will allow them to borrow money for projects their cities need.

The premier and the mayors also said the deal removes some previous restrictions on how they could spend provincial money.

Mandel told CBC News the deal means his city can go ahead with priority projects, such as the $250 million interchange at 23rd Avenue and Gateway Boulevard, a project with a price tag that doubled when bids came back.

"What it means is the funding formula that we were concerned about in the past will be far more flexible and allow the City of Edmonton to allocate the funds the way we think it is a priority," he said.

Stelmach said the deal will be put in writing in about two weeks.

"It is, of course, fulfilling my promise made during the [Tory leadership] campaign to provide additional funds to municipalities to help them deal with the incredible growth pressures that they're dealing with today," Stelmach told reporters after the meeting.

Unprecedented growth

Calgary, Edmonton and other Alberta cities have experienced an unprecedented population growth in the past few years due to the booming oil industry, and both mayors had been openly combative with the province over the need for more money.

While the deal announced Tuesday doesn't pledge more money for this year, Bronconnier said it's a welcome step forward from the province's April budget, which he said only promised money for the short-term, with many strings attached.

"It's a long-term commitment towards long-term infrastructure," Bronconnier said after the meeting.

Stelmach said a key part of the agreement was a recognition by the mayors that a downturn in Alberta's economy could potentially affect the funding arrangement.

Alberta Liberal Leader Kevin Taft said that flexible and stable funding for cities has been needed for a long time.