‘A helluva lot of money:’ Low oil prices put Alberta on track for $10B deficit

Alberta Finance Minister Joe Ceci says the prolonged cratering of world oil prices is expected to saddle his province with a $10.4-billion deficit in the next budget.

EDMONTON — Alberta Finance Minister Joe Ceci says the prolonged cratering of world oil prices is expected to saddle his province with a $10.4-billion deficit in the next budget.

“It’s a lot. It’s a helluva lot of money,” Ceci admitted at a legislature news conference Wednesday.

“That is simply the reality of our circumstances.”

In last fall’s budget, the province projected a $5.4-billion deficit for the 2016-17 fiscal year. Ceci said the new $5-billion figure would be on top of that.

“This is the steepest and most prolonged slide in oil prices in recent history, dropping more than 70 per cent in the last year and half,” he said.

“Projections for a quick recovery have proven wrong. This is a once-in-a-generation challenge.”

Oil and gas have long been the mainspring of Alberta’s economy, delivering multibillion-dollar surpluses earlier this decade.

But the benchmark price for oil has fallen from a high of more than $US100 a barrel in June 2014 to around US$30 today.

Every $1 drop in the average price of oil over the course of a year drains $170 million from Alberta’s coffers.

Ceci also said he can no longer promise to balance the books by 2020 and added he can’t set a new target date for when that might happen.

He emphasized the province will stick to its plans to avoid cuts in front-line jobs and critical services, to find savings where possible and to take on debt to create jobs in the construction of roads, schools, and hospitals.

“We won’t respond with knee-jerk cuts to make a bad situation even worse.”

The government won’t create new taxes, increase existing ones or introduce a provincial sales tax, he said. Nor are there plans to use any of the $19-billion in the Heritage Savings Trust Fund to reduce some of the red ink.

Alberta is now almost $19 billion in debt. Most of that money is being used for capital projects. The plan is to continue borrowing in the coming years to pay for capital and, if necessary, operating costs.

The debt by decade’s end had already been projected to hit almost $48 billion, but that was before Ceci’s $5-billion bombshell Wednesday.

Ceci said the 2016-17 budget is to be introduced in early April, but he wouldn’t give a date.

Opposition Wildrose critic Prasad Panda said no one blames the NDP for the collapse in oil prices, but the government is not dealing with it.

“Their plan is not working,” said Panda. “How they’ve responded to the situation is hurting Alberta’s economy.”

Ceci’s third-quarter update Wednesday for 2015-16 shows the government expects to run a $6.3-billion deficit this fiscal year, which ends March 31. That’s almost $200 million more than was forecast in the fall.

The update shows that the cash crunch is burrowing deeper into Alberta’s economy. Personal income tax revenue is down, while housing starts and car and truck sales are expected to continue to drop.

Oil and gas investment is expected to slow by 20 per cent in 2016.

Alberta also expects to see a net population outflow of 6,000 to other parts of Canada this year — the first such decline since 2010.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Rebels goalie Chase Coward tries to find a loose puck during WHL action at the Centrium earlier this season. (Photo by ROB WALLATOR/Red Deer Rebels)
Changes on the horizon for Red Deer Rebels next season

New coach, roster adjustments among top priorities for Sutter this offseason

Renovations and construction have begun at Red Deer Dream Centre. (Photo contributed)
Renovations underway at Red Deer Dream Centre

Christian-based addictions treatment centre

Red Deer County's municipal planning commission gave approval for a new directional sign for a business located near Elnora.
(Image from Red Deer County)
Red Deer County garden centre and winery gets sign approved

Delidais Estate Winery and DA Gardens is located near Elnora

(Advocate file photo)
Red Deer County approves home-based hair salon

Salon would be located in rural residential area just west of Innisfail

Alberta Premier Jason Kenney. THE CANADIAN PRESS/Jason Franson
Here is a list of latest COVID-19 restrictions in effect in Alberta

New mandatory health restrictions are now in effect in Alberta. Additional restrictions… Continue reading

In this Thursday, May 14, 2020 photo, a doctor holds his stethoscope during a patient visit in Blackburn, England, amid the coronavirus pandemic. Doctors in British Columbia are being warned they could face investigation or penalties from their regulatory body if they contradict public health orders or guidance about COVID-19. THE CANADIAN PRESS/Hannah McKay/Pool Photo via AP
B.C. doctors could face penalty for veering from COVID-19 health guidelines: college

B.C. doctors could face penalty for veering from COVID-19 health guidelines: college

A vial of the  AstraZeneca COVID-19 vaccine is shown at a facility in Milton, Ont., on Wednesday, March 3, 2021. Alberta says it won't give out more first doses of the Oxford-AstraZeneca vaccine for the time being.THE CANADIAN PRESS/Carlos Osorio - POOL
Hope for a good summer with one dose in arms, if we ‘crush’ COVID-19: Trudeau

Hope for a good summer with one dose in arms, if we ‘crush’ COVID-19: Trudeau

FILE-In this Wednesday, March 17, 2021 file photo, A make-shift memorial is seen outside a business where a multiple fatal shooting occurred on Tuesday, in Acworth, Ga. Robert Aaron Long, 22, accused of killing eight people, six of them women of Asian descent, in shootings at three Atlanta-area massage businesses was indicted Tuesday, May 11, 2021, on murder charges, and a prosecutor filed notice that she'll also seek hate crime charges and the death penalty. (AP Photo/Mike Stewart, File)
Prosecutor plans to seek death penalty in spa shootings

Prosecutor plans to seek death penalty in spa shootings

Labour Minister Harry Bains arrives at B.C. Legislature in Victoria, B.C., on Monday, June 26, 2017. THE CANADIAN PRESS/Chad Hipolito
B.C. pledges to introduce permanent paid sick leave program in January

B.C. pledges to introduce permanent paid sick leave program in January

In this June 8, 2017, file photo, fresh nuts, bolts and fittings are ready to be added to the east leg of the pipeline near St. Ignace, Mich., as Enbridge prepares to test the east and west sides of the Line 5 pipeline under the Straits of Mackinac in Mackinaw City, Mich. THE CANADIAN PRESS/AP-Dale G Young/Detroit News via AP, File
‘Massive and potentially permanent disruption’: Canada’s bleak view of Line 5 closure

‘Massive and potentially permanent disruption’: Canada’s bleak view of Line 5 closure

A Suncor logo is shown at the company's annual meeting in Calgary, Thursday, May 2, 2019.THE CANADIAN PRESS/Jeff McIntosh
Oilsands producer Suncor and utility Atco to pursue ‘world-class’ hydrogen project

Oilsands producer Suncor and utility Atco to pursue ‘world-class’ hydrogen project

A street sign along Bay Street in Toronto's financial district is shown on Tuesday, January 12, 2021. THE CANADIAN PRESS/Nathan Denette
North American stock markets rally to pare early losses over inflation concerns

North American stock markets rally to pare early losses over inflation concerns

This photo provided by World Food Prize shows Shakuntala Haraksingh Thilsted.  On Tuesday, May 11, 2021, Thilsted was named this year's recipient of the $250,000 World Food Prize, which was created by Nobel Peace Prize laureate Norman Borlaug in 1986 to recognize researchers who have improved the quality and availability of food. (Finn Thilsted/World Food Prize via AP)
World Food Prize goes to nutrition expert for fish research

World Food Prize goes to nutrition expert for fish research

Most Read