Province announces increased billion dollar deficit
Last week, the Alberta Government announced that based on results from the first nine months of the fiscal year, the province is forecasting a deficit of between $3.5 and $4 billion for 2012-13, due in part to “a multi-billion drop in non-renewable resource revenue,” according to a government press release.
Following the third quarter fiscal update and economic statement being released, Alberta’s official opposition, the Wildrose, immediately responded to the increased deficit projections.
Lac La Biche-St. Paul-Two Hills Wildrose MLA Shayne Saskiw says “it seems that the pre-election budget by the PC government mislead Albertans on both revenue and expenses,” and being in such a deficit position demonstrates a lack of fiscal competence, even after having near record revenue for the last five years.
He adds that other provinces, such as Saskatchewan and Newfoundland, are running balanced budgets and Alberta should be able to do the same. Saskiw says the price differential for oil is virtually the same now as it was in April during the election and adds that it’s scary to think of what would happen if the price of oil really dropped.
Saskiw points to a report from the Fraser Institute that says the province could have saved $22 billion if it limited spending to inflation plus population growth, while still increasing spending on core services.
The report, Alberta’s $22-Billion Lost Opportunity, “examines the history of Alberta budgets starting in fiscal year 2005/06 up until 2012/13 and concludes that successive Alberta governments failed to control spending and plan for fluctuating resource prices,” according to the Fraser Institute website.
Saskiw describes the deficit as being a result of “massive, chronic over-spending” on things such as new MLA offices, carbon capture and $1 million that was spent on attending the London Olympics.
“It was a big surprise in the sense of how large the deficit was,” says Saskiw in response to last week’s fiscal update. “This was much larger than we expected.”
He says the province’s current situation is setting the stage for more debt and believes a possible increase in taxes could be on the horizon. The Wildrose does not support tax increases, he adds.
Saskiw says he has heard from local constituents and many people are confused by the province’s financial state.
“The whole boom has been blown,” says the MLA, adding, Alberta is a province with “too many bosses and not enough workers.”
“We cannot cut frontline staff like nurses, doctors and teachers.”
In last week’s press release, the province announced it would be introducing a three-year management salary freeze, effective April 1. The freeze is expected to save $54 million. The province also announced it would be reducing the number of public sector managers by 10 per cent over the same period.
“Our government is leading by example – with a slimmed down cabinet; an eight per cent MLA pay cut and a pay freeze for MLAs; today we’re taking action on management salaries,” said President of the Treasury Board and Minister of Finance Doug Horner, in the release.
Over the first nine months of the 2012-13 fiscal year, resource revenue was $2.4 billion lower than expected.
“This was due to global economic uncertainty, a growing discount on Alberta bitumen prices, a higher exchange rate and lower land lease sales. These factors were partially offset by higher than expected corporate income tax, stronger investment income, and increased revenue from gaming and liquor sales. Greater revenue also came from a higher demand for motor vehicle licences, agriculture insurance and other fees that are driven by volume,” says the release.
Bonnvyille-Cold Lake Conservative MLA Genia Leskiw did not return calls to the St. Paul Journal for comment on the fiscal update.
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