Alberta Premier Alison Redford looks to the gallery before Minister of Finance Doug Horner presents the 2013 budget at the Alberta Legislature in Edmonton

Alberta Premier Alison Redford looks to the gallery before Minister of Finance Doug Horner presents the 2013 budget at the Alberta Legislature in Edmonton

Alberta budget holds the line

The Alberta government — squeezed by falling oil revenues and a growing population — has delivered a budget that holds the line on day-to-day spending but borrows billions to build roads, hospitals and schools.

EDMONTON — The Alberta government — squeezed by falling oil revenues and a growing population — has delivered a budget that holds the line on day-to-day spending but borrows billions to build roads, hospitals and schools.

There are no new or increased taxes.

The result is $6.3 billion in red ink.

“We are having a tough time here,” Finance Minister Doug Horner said Thursday before tabling the 2013-14 document in the legislature.

“We’re going to have five million people in this province within 17 years. Where are their kids going to go to school? Where are they going to have hospitals to go to? How are they going to get to work if the road isn’t there?

“We have to be able to build for the future – and that’s what this (budget) is about.”

Even though the government is not increasing its overall spending on operations, it anticipates a $2-billion deficit on revenues of $38.6 billion. The gap will be covered by the government’s Sustainability Fund, now renamed the Contingency Account.

Horner said the shortfall can’t be helped, but he isn’t happy about it.

“It’s been very rare for Alberta to have an operating deficit. That’s a big deal to me. I don’t want to see operating deficits in the future.”

He reiterated that falling revenues for Alberta’s oil are at the root of the province’s financial difficulties. The price that Alberta gets for its oilsands bitumen has been well below the North American benchmark for oil, West Texas Intermediate. That has knocked $6 billion off what the province had hoped to take in.

Alberta’s overall economy remains strong and unemployment is low. The population of 3.7 million is growing by 100,000 a year.

To combat the squeeze, Premier Alison Redford announced last year that her government would use its strong credit rating and low interest rates to borrow for infrastructure. The province has already borrowed $1.1 billion to twin the overcrowded and dangerous Highway 63 to the oilsands hub of Fort McMurray.

Thursday’s budget announced $4.3 billion in infrastructure borrowing, which includes the money for Highway 63. When the loan is combined with the $2-billion operating deficit, it leaves a $6.3 billion hole in the government’s pocketbook.

Horner stressed the infrastructure borrowing should not be seen as part of the deficit because the government considers roads, schools and hospitals as assets.

The budget promises $15 billion in spending over the next three years to build 50 new schools and upgrade another 70. There is to be $650 million worth of improvements to post-secondary institutions, and $2.1 billion for hospitals, family-care clinics and long-term care facilities.

There is also a provision for $2.5 billion over three years for towns and cities.

Horner reiterated that there is no extra money for salary increases for doctors, nurses or teachers.

“We have the highest-paid teachers in the country. We have the highest-paid doctors in the country (and only) Saskatchewan might be a little bit higher than us on the nursing side.”

Even though spending is effectively frozen, the move amounts to a cut when inflation and a four per cent growth in population are factored in.

The government resisted calls from opponents and academics to increase taxes. Redford had said in recent weeks that Alberta’s tax system has made the province profitable in the first place.

The government had already promised to cut 10 per cent of its management jobs over the next three years. Horner said he doesn’t foresee additional layoffs, but couldn’t rule them out.

Spending on health is to increase by $500 million, or three per cent, to $17.1 billion.

Of that amount, Alberta Health Services, which is responsible for delivering health care, is to get $10.5 billion for front-line services – a three per cent increase over last year.

In education, $6.1 billion is to be spent on grade-school funding to keep up with enrolment growth.

But post-secondary institutions are getting hit with a seven per cent cut to their $2 billion in operating grants. They’re also being directed to find savings in-house and to spare students from having to make up any shortfalls.

The budget represents a shift in how Alberta saves and spends. Redford had said she wanted a document that plans for dedicated savings to wean the government off the peaks and valleys of oil and gas prices.

To that end, Horner also introduced legislation that mandates a percentage of non-renewable resource revenue go to savings. It also dictates that debt servicing can’t be more than three per cent of operating spending.

On the revenue side, personal and corporate taxes are expected to bring in $19 billion, representing about half of all revenue.

Personal income tax is pegged to rise almost four per cent to $10 billion because of the growing population, while corporate taxes are expected to fall three per cent to $4.8 billion.

Non-renewable resource revenue, including money from the oilsands, is forecast to bring in $7.3 billion. The government expects oilsands bitumen will fetch on average US$68.21 a barrel this budget year – about three-quarters of the predicted benchmark price for West Texas Intermediate.

Horner says a pipeline bottleneck to the United States along with an oil glut from finds in North Dakota are to blame for the price differential.

The 2013-14 budget is more bad news from the province. In the current budget year, which ends March 31, the province had expected to run an $886-million deficit, but that has ballooned to an estimated $4 billion.

Horner found one bright note as he rose in the legislature to deliver the fiscal news. Before he started his budget speech, he wished Redford a happy birthday.

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

Just Posted

Premier Jason Kenney announced $200 million more money that will benefit seniors living in continuing care on Wednesday. (photography by Chris Schwarz/Government of Alberta)
Alberta premier skeptical about federal government vaccine predictions

Prime Minister Justin Trudeau suggests all Canadians could be vaccinated by fall

The number of positive cases of COVID-19 has been climbing up since Jan. 20 at Red Deer's Olymel meat processing plant. (File photo by Advocate Staff)
Some Olymel workers return for training, plant reopening date not set

Union calls for delay of opening as workers fear for safety

Artist Lorne Runham's COVID Bubbles abstract work (shown here as a detail) can be viewed in an online art show on the Red Deer Arts Council's website until April 18. (Contributed image).
Art created in Red Deer in the time of COVID can be viewed in new online show

The show by members of the Red Deer Arts Council runs until April 18

Activists against open-pit coal mining in the Rocky Mountains hung a protest banner outside Alberta Environment Minister Jason Nixon’s Rocky Mountain House constituency office. Exploratory coal leases in the Nordegg area were recently granted by Nixon’s UCP government, and many local residents say they feel betrayed, as they had been promised eco-tourism opportunities by Clearwater County. (Contributed photo).
Anti-coal mining activists post banner on Environment Minister’s Rocky constituency office

Activists call for clean water protection, ban on strip mining

Justice Anne Molloy, from top left, John Rinaldi, Dr. Scott Woodside and accused Alek Minassian are shown during a murder trial conducted via Zoom videoconference in this courtroom sketch on December 11, 2020. THE CANADIAN PRESS/Alexandra Newbould
Verdict expected today in Toronto van attack trial

Alek Minassian admitted to planning and carrying out the attack on April 23, 2018

UCP MLA for Lacombe-Ponoka Ron Orr. (File photo)
MLA Ron Orr: Benchmarks were achieved but goalposts were moved

Orr responds to concerns, calls on province to fully open Step 2

hands
The call is out in Rimbey to sign on with a group that is all about building connections

‘Already, we are building a network where we can rely on each other and help each other out’

Commissioner Roger Goodell talks about the Walter Payton NFL Man of the Year award during the NFL Honors ceremony as part of Super Bowl 55 Friday, Feb. 5, 2021, in Tampa, Fla. (AP Photo/Charlie Riedel)
Annual NFL women’s forum enhancing career opportunities

When Sam Rapoport envisioned conducting virtually the NFL’s fifth annual Women’s Career… Continue reading

Seiko Hashimoto, president of the Tokyo 2020 Organizing Committee of the Olympic and Paralympic Games (Tokyo 2020), speaks during a news conference with Toshiro Muto, left, CEO of Tokyo 2020, after a council meeting in Tokyo on Wednesday, March 3, 2021. (Kimimasa Mayama/Pool Photo via AP)
Fans from abroad unlikely for postponed Tokyo Olympics

Olympics scheduled to open on July 23

FILE - Singer Jhene Aiko poses for a portrait on Dec. 7, 2020, in Los Angeles. Aiko will host the 63rd GRAMMY Awards on March 14. (Photo by Chris Pizzello/Invision/AP)
Jhene Aiko to host Grammy Award premiere ceremony

63rd annual Grammy ceremony set for March 14

Minister of Canadian Heritage Steven Guilbeault holds a press conference in Ottawa on November 3, 2020. The Heritage Department is committing $40 million to a “COVID-safe events fund” designed to encourage arts and cultural plans to move forward in the pandemic. THE CANADIAN PRESS/Sean Kilpatrick
Heritage minister unveils COVID-19 events fund for arts and cultural sector

Financial support tops out at $100,000 per eligible applicant

opinion
Opinion: Crisis in long-term care must include data-driven change

More than 19,000 people in Canada have died from COVID-19 – more… Continue reading

The Dawe family home in the Michener Hill subdivision in Red Deer. This house was designed and built by Robert G. Dawe, a local engineer, in 1911 and has remained in the family ever since. (Contributed photo)
Michael Dawe: 65 years of Red Deer history

As a major milestone birthday looms, I thought that it might be… Continue reading

Most Read