Alberta’s deficit for this year is over $500 million higher than forecast, mostly due to the Fort McMurray wildfire.
The deficit for 2016-17 will climb to $10.9 billion according to the first quarter update released Tuesday.
“In the face of the oil price collapse and the economic impact of the wildfires, our government continues to take a prudent approach,” Alberta Finance Minister Joe Ceci said in a release.
Overall, the province estimates it lost $300 million, mostly in lower corporate and personal income taxes as a result of the Fort McMurray wildfire. Included in that, the province also lost up to $20 million in royalties as a result of plant shutdowns.
The disaster relief for that fire has totalled $647 million, but was offset with $452 million in federal funding. The province said there’s a possibility it could receive more funding, but when and how much isn’t clear.
WATCH: Alberta Finance Minister Joe Ceci updates the government’s first fiscal quarter Tuesday afternoon
Alberta continues to spend beyond its means. The province is borrowing $1.7 billion more than it forecast in the budget, for a total of just over $7 billion solely for operating expenses. The province said a big part of that increased borrowing comes from over $860 million needed to balance the books last year in the 2015-16 fiscal period.
Overall the revenue forecast for 2016-17 is up $708 million thanks to slightly higher prices for oil.
However, Alberta’s real GDP is still expected to decline by 2.7 per cent in 2016, compared to 1.4 per cent forecast in budget. It follows a contraction of 3.7 per cent in 2015. That’s the largest two-year contraction since records have been kept dating back to the early 1980s.
In 2017, the province expects the economy to begin its recovery after the two-year recession. Real GDP is forecast to grow by 2.4 per cent, boosted by reconstruction in Fort McMurray as a result of the wildfires, infrastructure spending and a slight increase in oil prices.
“Our commitment to support rebuilding after this year’s wildfires will help spur economic recovery in 2017, protecting thousands of jobs for Alberta families,” Ceci said.
Still, unemployment continues to hit Albertans hard. Since July 2015, a total of 82,300 jobs were lost in the province. Unemployment in 2016-17 is expected to fall by 1.7 per cent to eight per cent.
Watch below: It’s the most expensive natural disaster in Canadian history and now, we’re getting a better idea of the impact the Fort McMurray wildfire had on Alberta’s budget. Tom Vernon explains.