Alberta on track for operational surplus, faces capital spending deficit
Volatile oil and gas prices will force province to hold the line on spending, finance minister Horner says.
oil and gas prices
EDMONTON – Alberta is on track to record a $1.4-billion surplus on day-to-day spending this year, but it will be $8.5 billion in the hole on the capital side due to borrowing for new schools and roads.
Finance Minister Doug Horner had originally forecast a $451-million deficit on day-to-day operational spending, but he said Wednesday that higher-than-expected oil prices, along with a low Canadian dollar, have changed the economic outlook.
“We’re turning the corner,” Horner told a legislature news conference as he delivered his third-quarter budget update for 2013-14. “But we know that we must still be careful about what lies ahead. We need to be ready for what we can’t see around that corner. We all know how much our revenues can fluctuate in a short period of time.”
Horner said given the volatility in oil and gas prices, the province will continue to hold the line on spending when he brings down the 2014-15 budget on March 6.
“We will deal with the pressures that come from a rapidly growing population, but we’re not opening up the spending taps. Today’s surplus will be used to cushion future drops in revenue.”
Horner said this year’s projected surplus will be added to the province’s Contingency Fund, bringing it to $4.6 billion.
Wildrose critic Rob Anderson accused Premier Alison Redford’s team of “jiggery-pokery” to hide a consolidated deficit this year of $3.5 billion.
“The minister says we’ve turned the corner. We’ve not turned the corner,” said Anderson.
He said the government split the day-to-day spending from the capital spending starting last year to deflect attention from the billions the Tories are borrowing despite a roaring economy and a population boom.
“They continue to march us down the path of more wasteful spending, more deficits, more debt and more danger if things do not continue to go as well as they are from a revenue perspective,” said Anderson. “We are really setting ourselves up in this province for a huge, huge fall.”
NDP Leader Brian Mason agreed that the the extra oil revenues only proved Redford’s team “are lucky idiots who couldn’t run a lemonade stand.”
Mason said by tying daily spending to the “yo-yo” world of resource prices, the government is harming everyday Albertans.
He pointed to the current fiscal year when Redford underfunded programs and slashed spending to deal with the projected operational deficit, leading to cuts and layoffs, only to announce a $1.4-billion surplus.
“For this government, budgeting is really just throwing the dice,” Mason said. “If oil and gas prices are high (and) the dollar is low, they cash in. Otherwise, the rest of us pay the price.”
He said the government needs to get off the revenue “roller-coaster” by changing the 10% flat tax on personal income to something more fair and progressive.
Operational revenue for the first nine months of the year was $30.8 billion, which was $2.7 billion higher than expected.
Operational spending was $29.6 billion, about $1.1 billion higher than forecast due to emerging costs from the extensive flooding that hit Calgary and parts of southern Alberta last June.
Resource revenue hit $6.7 billion – about $1.4 billion more than forecast.
So far, the province has committed $1.2 billion to help small businesses and communities recover from the floods. That goes along with $537 million in operating expenses and $33 million in capital outlays.
©The Canadian Press