Alberta books first surplus budget since ’08
EDMONTON – Alberta has turned the corner following the global economic meltdown of 2008, according to budget numbers released Monday.
The final report for the 2013-14 fiscal year shows a $755 million surplus — the first time the government has been on the positive side of the ledger since the international financial crisis wiped out wealth around the world six years ago.
“We’re back in the black without question,” Doug Horner told a news conference at the legislature.
“This is the first fiscal plan surplus … if you go back to 2006-07. That’s good news.”
He said the province expects to continue to run a surplus in the current budget year, but said he’ll be cautious given the inherent volatility of oil and gas revenues.
“I would not want to make the comment that the sky’s the limit now,” said Horner. “We have to be ready for the unexpected.”
According to the final report, the province brought in more than $45 billion in revenue in the fiscal year that ended March 31. That’s 17 per cent more than expected, credited mainly to higher than forecast energy and tax revenues.
Total spending was almost $42 billion, about 10 per cent more than projected in the budget.
The extra spending went to pay for demand in health and social services and to rebuild from the heavy flooding that swamped parts of Calgary and southern Alberta last June. Horner said the flooding costs alone took $1.2 billion out of the budget.
On the savings side, the rainy day contingency account now sits at $4.7 billion, but is forecast to soon increase to $6 billion. Any amount over $5 billion must either stay in the account, go to capital spending or go to savings.
Horner said the government hasn’t decided yet what to do with it.
There is another $17.5 billion in the long-term Heritage Savings Trust Fund following returns of 16 per cent this year.
The province also took on more debt for capital projects.
By year’s end, it had accrued $8.7 billion in debt to pay for roads, schools, hospitals and other infrastructure for a province now at a population of four million and growing by thousands more every month.
The province is on track to borrow more than $21 billion by 2017.
Critics, including the opposition Wildrose party and the Canadian Taxpayers Federation, say the province is misleading Albertans by failing to account for this debt on the bottom line.
Wildrose finance critic Rob Anderson said the true deficit number this year is about $2.1 billion.
“It’s disappointing and an insult to Albertans that, at a time of amazing prosperity and revenues, the government continues to borrow billions and play a financial shell game with taxpayers’ dollars,” Anderson said in a news release.
“By (2016-17), we will be wasting $820 million on interest payments alone.”
Horner said one of the reasons the government succeeded this year was because it held program spending below the 5.6 per cent rate of inflation plus population.
NDP critic David Eggen said that’s nothing to brag about, given the population growth, now estimated to be three times the national average.
“While we might have an overall budget surplus here, certainly we have a remarkable deficit in the core services for which this government is responsible for,” said Eggen.
Budget reporting has become an issue in the PC party leadership race to replace former premier Alison Redford.
Candidates Jim Prentice and Ric McIver have called for a clearer bottom line to make budgets more understandable for Albertans.
Horner said he welcomes Prentice’s idea to convene a roundtable of experts to revamp the format, but questioned the call by McIver to return to the 1990s budgeting era of former premier Ralph Klein.
Horner said accepted accounting principles have changed since 2003 and that returning to rules introduced before then would be ruled out of order by the auditor general.
The third candidate, Thomas Lukaszuk, has said confusion over the budget is one of the key complaints he’s hearing from Albertans.
Party members pick their new leader in September.