EDMONTON — The Alberta government, with oil prices taking massive bites out of its bottom line, blew past its own spending safeguards Thursday to deliver a budget that forecasts almost $58 billion in debt within three years.
Finance Minister Joe Ceci confirmed that this year’s deficit will be $10.4 billion and said there is no expectation of balancing the books before 2024.
He also outlined details of a planned carbon tax that will cost a household earning more than $100,000 annually about $500 a year by 2018.
There are no other new or increased taxes.
Ceci told reporters before he tabled the budget that making deep cuts to a tanking oil-powered economy would only make things worse.
“We are continuing to put the pedal to the metal so that we can support Albertans through this downturn, the worst downturn in a generation,” he said. “We’re going to come out the other side in 2017.”
Next year’s budget deficit is forecast to be $10.1 billion and another shortfall of $8.4 billion is expected the year after that.
The last $3.8-billion of rainy-day savings in the Contingency Fund will be gone this year and Alberta will borrow $5.4 billion just for day-to-day operations.
The $58-million debt by 2019 is a significant leap. In the NDP’s budget last fall, the plan was for a $48-billion debt, but not until 2020.
To legally rack up the number, Premier Rachel Notley’s government plans to rewrite a law it passed late last year that capped borrowing to a maximum 15 per cent of the province’s GDP. The cap is to be eliminated.
Ceci had previously said the cap would keep interest payments on debt repayment within reasonable limits and not hamstring future generations.
The carbon tax begins Jan. 1 and will increase the cost of gasoline by almost 4.5 cents a litre. It will also raise the cost of home heating, but not electricity. The carbon tax is to increase in 2018.
The levy is expected to cost a household earning more than $100,000 annually $338 in 2017 and $508 in 2018.
A household under $51,250, or $103,000 per couple, will get rebates — plus a little bit more — of $360 next year and $540 the next.
The carbon tax is part of the government’s larger climate-change strategy to reduce Alberta’s carbon footprint and give it what it terms “social licence” to argue for increased energy infrastructure such as pipelines.
The tax will raise an estimated $274 million in the abbreviated 2016-17 fiscal year and then rise to $1.7 billion by 2018-19.
Notley has promised to reduce Alberta’s dependence on oil and gas revenues and the budget builds on that commitment.
There are two new tax credits worth $250 million to encourage investment in small- and medium-sized businesses and give business leaders incentives to make capital investments.
The small-business tax is to be cut to two per cent from three.
The overall spending increase is two per cent with small hikes in the core departments of health, education, advanced education and social services.
The province is also avoiding cuts to front-line services.
“Alberta families will know we have their backs,” said Ceci.
The budget is based on West Texas Intermediate, the benchmark price for oil, averaging US $42 a barrel this year and then US$54 the year after.
The price has fallen from a high of more than US$100 a barrel in mid 2014 to under $30 in January and back again to the low $40s.
This year, Alberta expects to take in $1.4 billion in non-renewable resource revenue compared with almost $10 billion two years ago.