EDMONTON — Premier Ed Stelmach, in his final budget as premier Thursday, fought off the fiscal hawks to proclaim: Damn the red ink, full speed ahead with the road graders.
Stelmach’s Progressive Conservative government is budgeting for a $3.4-billion deficit in 2011 in order to fund $6.6 billion in infrastructure spending on roads, schools, and hospitals.
That figure, on a per capita basis, is 50 per cent higher than any other province.
Stelmach’s finance minister, Lloyd Snelgrove, said the government has learned from the past when it built in boom years while costs were high and cut to the bone when budgets were lean.
“There’s a practical side when you see the damage that can be done by overcutting,” said Snelgrove.
“Albertans told us last year and told us this year: ’We don’t want to go back into the pendulum days of government, where you go from an overspend to an overcut.”’
It’s the third consecutive multibillion-dollar budget deficit from a province that had budget surpluses, some in the billions of dollars, for 15 years prior.
This budget forecasts spending of $39 billion and revenues of $35.6 billion, with the shortfall to be paid off by the province’s rainy day Sustainability Fund.
The fund — surplus revenue socked away when oil and gas were delivering big surpluses in the last decade — was at $17 billion in its heyday, but will fall to $5.3 billion by the time the latest deficit is paid off in March 2012.
Snelgrove said they’ll use the fund because that’s what it’s there for.
“To leave that (Sustainability Fund) money in the bank, and let go some of our best teachers and nurses certainly doesn’t make sense to me,” he said.
Revenues are projected to go up by $1.6 billion, driven primarily by more resource and tax money. Bitumen royalties from Alberta oilsands are expected to deliver $4.1 billion in revenue this year and $7.1 billion within three years to put the province back in the black by 2014.
Danielle Smith, leader of the opposition Wildrose Alliance — a party that is making inroads on the Tories’ fiscal conservative wing — said Stelmach’s team still can’t tell the difference between wish lists and realistic spending decisions.
“This government is full of spending addicts,” said Smith.
The capital spending plan calls for $17.6 billion over three years. Smith said the government should stretch that out over five years to save money, and also axe controversial programs like the $2 billion for carbon capture and storage technology.
“We don’t see any path (by the government) other than having their fingers crossed and hoping for an increase in (oil) royalties,” she said.
Alberta’s Opposition Liberal Leader David Swann agreed that the capital spending plan should be stretched out.
“This Conservative government continues to act as if it’s playing with an endless supply of Monopoly money. This is not a game,” said Swann.
While there are no tax increases, Albertans are getting hit with fee hikes to register their cars, search land titles, file business documents and even reserve a camping spot.
Thursday’s budget was delivered against a backdrop of political flux in the province.
With the Tories being challenged by the Wildrose on the right and facing pressure from the fiscal conservatives within the party, Stelmach has already indicated that he will step down in the fall. Three of his cabinet ministers recently quit to run for his job as premier and Tory leader.
The Tories are not the only party holding a race.
Swann has also announced he is quitting after the spring sitting. So far there is only one candidate, Laurie Blakeman, to replace him as head of the Alberta Liberals.
The centrist Alberta Party is in a leadership race of its own and recently got its first sitting member in Calgary MLA Dave Taylor, who was elected as a Liberal.
The Wildrose has a leader in Smith, but she doesn’t have a seat in the legislature.
That leaves Brian Mason of the NDP as the only party leader who is in the house and not on his way out.
Mason took issue with the fee hikes in the budget, saying they are typical of a government that recently reduced the millions of dollars in royalties that oil companies must pay.
The government “is giving massive billion-dollar gifts to its corporate friends and nickel and diming ordinary people,” Mason said.
On the spending side, the total outlay of cash is just 0.5 per cent higher than 2010.
The Health Department continues to eat up the lion’s share. It gets a six per cent hike to its base funding, bringing its expenses to almost $15 billion — about 44 per cent of total government operating expenses.
The budget assumes that oil will stay at US$89.40 a barrel and that Canada’s dollar will remain close to par with the U.S. greenback. Alberta’s economy is expected to grow by 3.3 per cent. With the unrest in the Middle East, oil prices hovered at around $100 a barrel Thursday.
Scott Hennig of the Canadian Taxpayers Federation said the government’s plan for oil and gas to bail the province out may be wishful thinking.
“Their projections that we’ll be out of deficit by 2014 are very rosy,” he said.
“They’ve made some projections that are well above industry averages for oil and gas.”
Registering a corporation more than doubles from $100 to $250. Reserving a camping spot was $10. Now it’s $12.
Total spending is up by $191 million, which Snelgrove says is one-half of a per cent more from 2010.
The Health Department continues to eat up the lion’s share of cash. It gets a six per cent hike to its base funding, bringing its expenses to almost $15 billion, about 44 per cent of total government operating expenses.
Education gets $6.2 billion for programs in 2011, a boost of 2.7 per cent.
The budget assumes that oil will stay at US$89.40 a barrel and that Canada’s dollar will remain close to par with the US greenback.
Alberta’s economy is expected to grow by 3.3 per cent.
The oil price prediction may be low given the violence and political unrest in oil-rich Libya. Benchmark West Texas Intermediate crude for April delivery was at US$97.28 on the New York Mercantile Exchange Thursday. The contract climbed as high as $103.41 per barrel earlier in the day
Snelgrove said his forecasts will remain cautious because of long-standing volatility in the region.
“An overthrow or a (political) takeover can stop just as quickly as it can start, so we’re certainly not going to change our projections.”
Resource revenue is forecast to be $8.3 billion, half of which will come from oilsands bitumen royalties. Profits from bitumen are expected to soar to $7.1 billion in just two years due to increased production.