EDMONTON — Alberta's NDP government is set to reset the economic game plan Tuesday, choosing from a menu of unpalatable alternatives brought on by a core economy deep in the dumper of low oil prices
"We've got a budget billions of dollars (in) the hole," Finance Minister Joe Ceci said in an interview.
"We have a fiscal structural problem in this province that needs to be repaired and we're starting to take steps to do that."
The budget is the centrepiece of a fall legislature session that begins Monday.
The budget is expected to feature the biggest deficit in Alberta's history. Ceci has already projected it will be just under $6.5 billion.
On top of that, there are expected increases in capital spending for a province squeezed in the vise of a growing population, thousands of private-sector job layoffs, and shrinking revenues.
Ceci said it will be a longer-term blueprint to create jobs, grow the economy, and balance the budget by 2020 while protecting core services in areas like health and education.
The government has already signalled it will continue debt financing for capital construction that began under the Tories and is projected to $31-billion by 2019.
"We want to see if we can … bring in some programs and capital programs that will help stimulate the economy," said Ceci.
But Ceci said the government is looking for places to cut without sacrificing critical front-line jobs, like teachers and nurses.
"We're going to get the rate of program growth under control," he said.
"We are continuing a hiring restraint initiative that was started in January. (And) we're going to be carefully looking at all the (300-plus) agencies, boards and committees that are out there."
Wildrose Opposition Leader Brian Jean said Alberta is flirting with a debt-to-GDP ratio that will cost it its valued triple-A credit rating.
Lose that rating, said Jean, and the dominoes fall: the province needs to spend more to borrow, causing it to hike taxes to pay for it.
"The NDP are putting our credit rating at risk and it's a very, very serious issue," said Jean.
Progressive Conservative finance critic Manmeet Bhullar urged the NDP to tread carefully on sweeping initiatives like its plan to eventually hike the minimum wage to $15 an hour by 2018.
"Ideological pursuits and wishful thinking will not solve our problems," said Bhullar.
Making good on other campaign promises, the NDP has already hiked the corporate tax rate, the minimum wage and personal income tax rates on high end earners.
Alberta Party Leader Greg Clark said the NDP needs to work smarter, reduce administrative overlap and free up public sector workers up for other tasks.
"What I would like to see is a real effort to do more with less," said Clark. "Let's create that culture of innovation."
West Texas Intermediate, the benchmark price for Alberta's oil, has been in a deep funk for more than a year. It peaked at more than US$100 a barrel last June, but slid quickly by the fall and has been in a trough ever since. It is now under US$45 per barrel.
The budget is for the 2015-16 fiscal year, which began April 1 and is already more than six months old.
The province has been paying the bills after passing spending warrants in the spring session.
SURPLUS TO DEFICIT AND BACK: TAKE A RIDE ON THE ALBERTA BUDGET ROLLER-COASTER
EDMONTON — Alberta's NDP government is to table its first budget on Tuesday. Here is a recent history of Alberta budgets:
2008-2009 (tabled April 22, 2008)
Slogan: The Right Plan for Today and Tomorrow
Premier: Ed Stelmach. Finance minister: Iris Evans
Alberta's last forecasted surplus budget. Total spending is up 10 per cent to a record $37 billion. Surplus of $1.6 billion. Health premiums, which have generated $1 billion annually, are eliminated to save families $1,056 annually. Alberta Employment Tax Credit increases 10 per cent to save a middle-income family with two kids $316 a year. There's money to hire 300 more police officers and create 14,000 child-care spaces. Good times don't last as the world economy takes a beating. By the third-quarter update, the province is on track for a $1-billion deficit — the first red ink in 15 years. Evans blames $3 billion in investment losses in the Heritage Savings Trust Fund, one of Alberta's rainy-day accounts.
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2009-2010 (tabled April 7, 2009)
Slogan: Building On Our Strength
Premier: Ed Stelmach; Finance minister: Iris Evans
Budget forecasts a $4.7-billion deficit, the largest in Alberta history. Program spending is up 3.7 per cent, but resource revenue projections are cut in half. There are tax increases for alcohol and tobacco, as well as hikes in education property taxes. Annual coverage of $200 for chiropractic services is eliminated.
2010-2011 (tabled Feb. 9, 2010)
Slogan: Striking the Right Balance
Premier: Ed Stelmach; Finance minister: Ted Morton
Deficit again forecast to reach $4.7 billion. Spending on health is up 5.6 per cent. Spending on education is up 4.6 per cent. There is a plan to spend $20 billion over three years on schools, roads and hospitals. The government holds the line on taxes.
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2011-2012 (tabled Feb. 24, 2011)
Slogan: Building a Better Alberta
Premier: Ed Stelmach; Finance minister: Lloyd Snelgrove
There is turmoil in the weeks leading up to the budget. Stelmach announces his intention to step down. There are reports his hand was forced by fiscal hardliners in his Tory party, including Finance Minister Ted Morton, who are unhappy with the string of deficits. Morton promptly resigns to run as Stelmach's replacement. Newly named Finance Minister Lloyd Snelgrove brings down a budget with a deficit of $3.4 billion. Spending is predicted to be $33.9 billion, up 2.2 per cent. Fees go up for car registration, incorporating a business, searching a land title and reserving a camping spot.
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2012-2013 (tabled Feb. 9 2012)
Slogan: Investing in People
Premier: Alison Redford; Finance minister: Ron Liepert
Redford's first budget is tabled right before a provincial election. It predicts an $886-million deficit, a balanced budget the following year and a $5.2-billion surplus in 2014-15. There are no new taxes, tax increases or cuts to the public service. Social assistance payments increase by an average of five per cent. There's money for 90 new RCMP officers and 55 new sheriffs. After the Tories are re-elected, talk turns to tough times ahead. Redford coins the term "bitumen bubble" to refer to a glut of oil in the U.S. that is driving down the price of oilsands crude. By the third-quarter update, Alberta is forecasting a deficit of between $3.5 billion and $4 billion.
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2013-2014 (tabled March 7, 2013)
Slogan: Responsible Change
Premier: Alison Redford; Finance minister: Doug Horner
The budget comes at a time when the province is feeling the squeeze from falling oil revenues and a growing population. It holds the line on day-to-day spending but borrows $4.3 billion to build roads, hospitals and schools. 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 shortfall, coupled with borrowing, means $6.3 billion in red ink. Horner says the $4.3 billion should not be seen as part of the deficit, because the new infrastructure the money is paying for is an asset. There are no new or increased taxes, but no extra money for doctors, teachers, nurses or other government workers in contract talks.
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2014-2015 (tabled March 6, 2014)
Slogan: The Building Alberta Plan
Premier: Alison Redford; Finance minister: Doug Horner
Alberta is back in the black on day-to-day spending with a $1.1- billion surplus, but the good times are being underwritten with billions of dollars in debt to pay for roads, schools and hospitals for the tens of thousands of newcomers arriving each year. There are no new taxes and no tax increases. There is money for 40 more Mounties, 50 news schools and 2,000 new spaces for post-secondary students. And there is cash to complete twinning of the overburdened and dangerous highway to the oilsands hub of Fort McMurray.
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2015-2016 (tabled March 26, 2015, but never passed)
Slogan: Putting Things Right
Premier: Jim Prentice; Finance minister: Robin Campbell
Plunging oil prices punch a multimillion-dollar hole in the government's reveune. Prentice pledges to get the government off the roller-coaster of energy revenues. The plan calls for Albertans to pay more to get married, go camping, have a drink and fill up at the pumps. It retools tax rates so that the wealthy pay more. It also brings in a health-care levy. Even with all the changes, the budget forecasts the largest deficit in Alberta's history at $5 billion. Prentice calls an election before the budget is passed and the Tories are swept from power by the NDP.
SOME OF THE THINGS TO WATCH FOR IN THE ALBERTA NDP'S FIRST BUDGET TUESDAY
EDMONTON — Here are a few things to watch for in Tuesday's Alberta budget, the first since the NDP was elected in May:
The bottom line: Low oil prices have stripped billions from one of the Alberta government's key revenue streams. Finance Minister Joe Ceci has already said the deficit could be just under $6.5 billion and the budget won't be balance until the 2019-2020 fiscal year, a year later than promised.
No large-scale job cuts: "Stabilize public services" has been one of the key messages Ceci has used in the lead-up to the budget. Albertans have grown to expect governments to signal deep civil-service cuts when times are tough. Not this time, says the NDP. Ceci says he will avoid "knee-jerk reactions that would result in firing nurses and teachers during these tough economic times" and "make things worse." He's less definitive on wage freezes or taking a hard line during contract negotiations. "Those are all things that will be under discussion."
Taxes and fees: The NDP has already moved ahead with an increase in the corporate tax rate to 12 per cent from 10 per cent and has hiked income tax rates on those making more than $125,000 a year. The government has ruled out introducing a provincial sales tax and promised during the election campaign not to move ahead with a planned health-care levy and higher fees for vehicle registration, marriage, death and birth certificates and mortgage registration.
Money for industries other than oil: "Diversify the economy" has been another one of the government's key messages heading into the budget. During the campaign, the NDP promised a tax credit for Alberta businesses who invest to create new jobs. The NDP platform also promised to "actively support" alternative energy; high tech and advanced research; film and television production; small brewing; value-added agriculture and food processing.
Children and young people: The government promised during the election to move toward $25-a-day child care and all-day kindergarten as finances permit. It has already announced a tuition freeze for post-secondary students.
Loans for making homes greener: The NDP has promised a retrofitting loan program to help families, farms and small businesses reduce energy usage and create jobs in the construction industry.
