Awash in a sea of debt

It appears Alberta’s sea of red ink is going to get even deeper before the signs of economic improvement will have a buoyant effect on the province’s economy.

CALGARY — It appears Alberta’s sea of red ink is going to get even deeper before the signs of economic improvement will have a buoyant effect on the province’s economy.

Alberta was awash in oil revenues and the envy of the nation with a 15-year string of surplus budgets that had helped the pay off $25 billion in debt accumulated in the 1980s and early 90s. But the province has been hit by a recession and falling energy prices and the debt is piling up again.

Ed Stelmach’s Progressive Conservative government had already projected a record $4.7 billion shortfall when it unveiled its budget in April and a Finance Department official disclosed in late June the number was closing in on $7 billion.

The first quarter financial update is next month.

“More than likely it will be higher but we’ll have the first quarter report, I believe, at the end of August and that will give a better picture of the first four months,” conceded the premier.

“Remember last year? The first quarter report was showing a small surplus — we got to the second quarter with $145 (a) barrel oil and everyone’s saying — oh boy how we gonna spend all that money? Well, by the end of the year it was down to $35.”

There are some “green shoots” of improvement, said Stelmach including renewed investment in the oilsands and with agricultural commodity prices. But resource revenue is still a problem.

“We do have very, very low gas prices. Gas in storage is at abnormally high levels and so that’s going to take away from the revenue stream to the province.”

“We also have to remember that a province does not recover its revenue stream until at least a year after the private sector does better.”

The Canadian Taxpayers Federation said the deficit is spiralling out of control.

“Even here in B.C. the government started out by saying it was only going to be roughly a $500 million deficit and now they’re saying its going to be much bigger. It’s no surprise that Alberta is saying the same thing,” said Maureen Bader, the B.C. director for the Canadian Taxpayers Federation.

“The recession is probably deeper than what they were first imagining and until natural gas prices recover government revenues aren’t going to recover. But ultimately at the end of the day the deficit is caused by out-of-control spending.”

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