The Alberta government is forecasting one year of deficit before getting out of the red thanks to a projected economic growth that rivals some of the boom years in the past.
The budget calls for a deficit of $886 million in 2012-13, followed by surpluses of $952 million and $5.2 billion in the following two years ending in 2014-2015 fiscal year, and it does not include any tax increases or any major spending cuts.
The budget projections are based on a 3.8% growth rate for this year. That is almost double the forecasted growth of anywhere in the country or for the United States.
The budget forecasts revenue of $40.3 billion, that’s up $1.8 billion. It also calls for expenses to top $41.1 billion, an increase of $1.3 billion.
Critics have derided the government in the past for spending too much, but Treasury Board President Doug Horner says while spending is up, it’s not unreasonable.
“Our total expenses are less than the population plus inflation.”
The rosy growth forecast is based mainly on increased production, prices and royalty revenues from the oil and natural gas sector – a revenue source that can be extremely volatile.
“We all recognize we are too reliant on resource revenue,” Finance Minister Ron Liepert told media before delivering the budget in the Legislature.
Liepert says the focus of the government over the next year or so will be to consult with Albertans on ways to reduce the impact of the up and down nature of non-renewable resource revenue.
“We will have a conversation with Albertans,” says Liepert “and it will be lengthy.”
As for what it means to the regular Alberta, the good news budget increases spending in three core areas – Health, Infrastructure and education.
People with disabilities who collect the Assured Income for the Severely Handicapped will get an automatic bump of $400 per month effective April 1.
The threshold to qualify for full child care subsidies rises to $50,000. The government expects 2,000 families will see an increase and between 3,000 and 5,000 more will now qualify.
Other spending details include; Health and Wellness will receive a 7.9% bump while Alberta Health Services gets an extra 6%. Municipalities will get more than $2 billion and $16.5 billion dollars over the next three years in public infrastructure.
Total spending is up 6.9% and Liepert admits that kind of increase is not sustainable.
“We acknowledge we can’t continue with 6.9 percent operational increases.”
One of the wildcards in this year’s budget is upcoming labour negotiations with teachers and physicians.
The budgets may not include pay hikes for those negotiations. Horner says he expects departments will be able to work within their allotted funding.
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