Above: Government believes it’s building on success with 2014 provincial budget
EDMONTON – Alberta’s finance minister revealed the 2014 budget on Thursday, announcing a consolidated surplus of $1.1 billion.
“We’re going to continue to play it safe,” said Doug Horner.
“There is no question things are looking good in Alberta today, but even so, I’m delivering this good news with some cautious optimism.”
This is the first time in six years the province has not forecast a deficit.
(Image Source: The Canadian Press)
Total revenue is forecast at $44.4 billion, which is 5.4 per cent higher than last year. (Budget highlights from government posted below)
“There have been a few factors that have worked in our favour, including better energy prices, higher returns on our investments and higher revenues from taxes,” Horner explained.
In contrast to the 2013 budget, non-renewable resources revenues are up, and the province expects resource revenue for this year to be $9.2 billion, which is more than six per cent higher than last year.
The government announced a $2.6 billion operating surplus, but will be taking on $5.1 billion in debt to finance capital projects this year.
Above: Alberta Finance Minister Doug Horner speaks about the operating surplus
For the second year, the government has split the numbers into two parts: operational (day-to-day) and capital (long-term).
The opposition has stressed the way the government is presenting the numbers is misleading.
“What the PCs are planning to do, very clearly, is they’re going to continue to borrow as much as possible for capital and have large operating surpluses,” said Wildrose Finance Critic Rob Anderson earlier this week.
“And, instead of using those operating surpluses to pay for the capital, they’ll keep borrowing for the capital, and use the operational surplus, instead, to fund different spending programs or endowment programs.”
“Essentially what we’re doing is borrowing on one hand, in order to save a much lesser amount on the other.”
READ MORE: Critics slam Alberta’s ‘debt-ridden’ budget
Horner stressed there is no borrowing for operational expenses, money is being set aside to pay off the debt, and that borrowing for capital projects makes good financial sense.
“Spending our savings, which are earning 11 per cent, when we’re borrowing at less than four per cent, doesn’t make sense.”
“Alberta has no net debt,” he added. “While other places borrow to keep the lights on, to pay off the credit cards, Alberta only borrows to create more assets by building the infrastructure Albertans need.”
In its capital plan, the government will spend $19 billion over the next three years on infrastructure projects like building and updating schools, ring roads, medical facilities, and building and twinning highways.
But, the Building Alberta plan comes at a cost: the total debt forecast for 2014 is $14.5 billion.
Under this forecast, Alberta will have borrowed $21.6 billion by the 2016-2017 fiscal year.
Click here to view all the Alberta government’s documents on Budget 2014
Budget 2013 was a tough one for many sectors. The government nearly froze operational spending.
And, the province vows to continue “living within our means.” In the 2014 budget, operational expenses increase by 3.7 per cent from last year’s budget. It’s less than population plus inflation, but higher than it was last year.
Over the last 10 years, on average, the government says operating expenses increased by 7.3 per cent each year. Horner said that was unsustainable.
“Is this going to make everyone happy? Probably not. It never does.”
“The reality is we’re going to live within our means, we’re balancing the budget, and we’re putting money aside for both savings and for capital planning.”
Click here to view all the budget documents released by the province.
The 2014 budget comes as Premier Alison Redford is facing criticism over travel expenses, and shortly after a poll showing public approval of the party and its leader slipping was released.
READ MORE: Premier Redford’s approval rating tanking according to new poll
“This is a critical budget for her,” said Chaldeans Mensah, a MacEwan University political scientist.
“Her popularity is low. She needs to woo the voters in Calgary and Edmonton. In the last budget, she was very tough on post-secondary education, on the public sector, and she needs to find a way of getting those voters back.”
Budget 2014 includes a 5.5 per cent increase to Advanced Education and Innovation. Including the Access to the Future Fund – which was restored this year – funding for post-secondary is close to what it was before the cuts in the 2013 budget.
While there are no cuts in this budget, there are also no big operational spending increases.
Education will see a 3.2 per cent increase, Health will see a 3.6 per cent increase, and Human Services will get a 5.5 per cent increase, with a substantial boost to intervention services for children and youth.
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