Battered local economy leaves Alberta towns struggling with viability

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Nestled in the rugged foothills of Alberta's Rockies, the town of Grande Cache was hewn out of the wilderness 47 years ago ago to house miners from nearby coal pits. Today, the town of 4,500 is struggling and local officials are considering dissolving it as financial woes mount.

With the local economy battered by job losses and the town's aging infrastructure in need of expensive rebuilding, Mayor Herb Castle and Grande Cache's council has endorsed the drastic step of going to the Alberta government and asking for a review of the town's viability. While the province could endorse the status quo, the mayor is leaning toward dissolution, putting himself out of a job and erasing the town from the map.

"We're concerned about our financial future and we've struggled to balance our budget. We just don't think we can remain independent with our current funding," he said. The review should be finished in about a year.

With an Alberta economy reeling from depressed energy prices, areas across the province are increasingly struggling. Grande Cache isn't the only Alberta municipality currently going through a provincial viability review as nine other towns and villages are currently eyeing dissolution – an admission of financial troubles in many cases. Six municipalities have already gone through the process since 2012; half were disbanded.

Local taxes in Grande Cache are the second highest of any town in the province, and despite paying down two-thirds of municipal debt over the past three years, the town doesn't have money in reserve to rebuild kilometres of sewage and water pipes that will soon need replacement. The town isn't bankrupt, but the mayor says the future is bleak.

Nearly 700 employees were laid off at nearby Grande Cache Coal over the past three years as the strip mine and underground pits were closed. The last employees were let go just before Christmas of 2015 as the market for metallurgical coal crashed.

There are now nearly as many boarded up storefronts as there are open shops in town. Hours of operation at the few remaining businesses have been slashed. The parking lots are empty. House prices are crashing and the population is falling.

"People weren't getting rich when the mine was running, but now they can't keep going. Everyone has known for years that this town is facing bankruptcy," said Gary Taje, a local union leader.

While Mr. Taje finds the current process upsetting, he doesn't see another option for the council.

While the town's most pressing issues – a crippling infrastructure deficit and a withered tax base – have been made worse by Alberta's continuing recession, they also point to deeper cracks within the province that was once Canada's economic engine. The four mayors contacted for this story described the province's property-tax system as broken. Most local taxes paid by energy producers go to rural counties, leaving nearby towns without any financial buffer and making them prone to collapse when downturns occur.

Premier Rachel Notley's government is currently reviewing the province's municipal governance and is expected to pass a new law in the fall that could require counties to share their industrial wealth with nearby urban centres.

During a provincial viability review, a municipality's books are thrown open. One mayor whose village went through the process likened it to a thorough physical. Financial statements are reviewed; debt, liabilities, staffing levels and municipal procedures are examined; and the state of local infrastructure is audited.

Grande Cache is the largest municipality yet to enter the process. The major employers left in the town, 430 kilometres west of Edmonton, are a lumber mill and a nearby federal prison. The mill has struggled in recent years and the federal government hasn't renewed a lease that expires soon on the 243-bed prison.

"It's almost an economic perfect storm. There just isn't enough industry there to support a town of that size," said Dale Gervais, the reeve of the nearby Municipal District of Greenview.

If the provincial viability process recommends dissolution, Grande Cache would probably become a hamlet within the county overseen by Mr. Gervais. The county is half the size of the province of New Brunswick and contains about 5,000 people – it also has a large tax base due to numerous oil and gas operations.

"Absorbing them is something we've contemplated and with the recent economic downturn it isn't surprising the Grande Cache council has taken this route. The economy in Grande Cache is pretty bleak," Mr. Gervais said.

He said that most of the town's workers would probably be kept on by the county, which already has a small administrative office in Grande Cache. "Life would just go on," Mr. Gervais said.