Budget puts Alberta back into debt
Province: Deficit, program cuts and $4.3 billion to be borrowed in 2013 budget
By: Don Patterson
| Posted: Friday, Mar 08, 2013 11:13 am
Alberta is going back into debt.
The provincial government unveiled its 2013 provincial budget on Thursday afternoon and it includes cuts to some programs, increases for health care and billions into provincial savings, but most notably it is the sixth consecutive deficit budget.
Finance Minister Doug Horner called it a “once in a generation” shift in how the Province will manage its finances with the government splitting its budget into three parts – an operating plan, a savings plan and a capital plan.
However, the most controversial aspect of the provincial budget is the fact the government plans to borrow $4.3 billion to pay for new capital projects, a proposal which does not sit well with the opposition parties.
Wildrose Party leader Danielle Smith called the plan to borrow a disgrace.
“It took a generation to pay off Don Getty’s debt, it will take another generation to pay off Alison Redford’s debt,” said the Highwood MLA.
The budget tabled Thursday doesn’t include any new taxes and the government will invest in the Heritage Savings Trust to grow Alberta’s savings to more than $24 billion over the next three years.
On the operating side, the Province is forecasting a $451 million operating deficit, with operating surpluses in the coming years. The budget calls for $37.6 billion in operational revenue, with $38 billion in operating expenses – the same as last year.
One of the largest expenditures in the budget is a three per cent increase to Alberta Health, an additional $500 million, for a total budget of $17.1 billion.
The Province will not borrow money for operational expenses, but it has opened the door to borrowing for capital projects.
The Province is touting a three-year, $15 billion capital plan with $5.2 billion in spending this year – $4.3 billion of which will be borrowed.
Horner said the government has laid out a plan to address the Province’s infrastructure needs in the future and continue with projects necessary to meet growth.
“This tremendous growth will have a significant impact on our province, on our public infrastructure, and on the way we as a government work to meet the needs of this much larger population,” he said.
Smith said the government still has a spending problem and Alberta will end up $5 billion in debt after this year. As well, she said the premier is on pace to rack up $17 billion in debt by the next provincial election in 2016. As a result, Albertans will end up paying more than$1 billion in interest charges on the debt.
While the government is not introducing any new taxes, Smith said it does not mean they will not be coming in the future.
In addition, the Highwood MLA said foothills municipalities will lose out as the Province is cutting funding to towns and cities.
“I think this is likely going to have a significant impact on Okotoks, High River and the MD of Foothills,” she said.
Okotoks Mayor Bill Robertson said municipalities will see less money as operational grants will drop by 3.1 per cent and capital spending grants will decrease by 4.4 per cent.
“In Okotoks we realize the Province is up against a fiscal barrier, they have some tough decisions to make, they are cutting spending,” he said.
The budget may also dampen the Town’s hopes for help with the cost of buying water licenses.
The Province has cut funding for the Water Life Strategy by 58 per cent, from $177 million to $75 million. The Town has looked to the program as a possible funding source to help cover the costs of buying new water licenses.
Although the program has been cut Robertson said he still wants the Province to use what funding is left in the Water Life Strategy program to help the Town purchase water licenses.
Robertson said he is ultimately disappointed to see the Province taking on new debt because he would rather see an increase in taxes, even by a small amount, over borrowing money.
“Our provincial tax – the flat tax – is so low, I think they could raise that by one or two per cent,” he said.
Reaction to the provincial budget was also swift on Okotoks’ streets as local residents said they were disappointed to see Alberta go back into debt.
Okotoks resident Rick Lewis said he was disappointed with the decision to borrow money.
“I think they need to go back and rethink it,” he said.
Lewis said he would also like the Province to take another look at potential tax increases rather than borrow.