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Finance Minister Ted Morton, right, delivers the Alberta budget in Edmonton on Tuesday while Treasury Board President Lloyd Snelgrove scans some pages next to him. ((John Ulan/Canadian Press))

Alberta's Progressive Conservative government is projecting a record $4.7-billion budget deficit and planning cuts in many departments while increasing health-care spending by 16.6 per cent.

"We've chosen to make cuts in some areas and increase spending in others to protect essential services," Finance Minister Ted Morton said Tuesday at a news conference before his budget speech.

"These choices, we believe, strike the right balance between spending too much and spending too little, between fiscal discipline and protecting essential services, and between funding services today and also not saddling future generations with debt."

The government is projecting it will spend $38.7 billion during the 2010-11 fiscal year while taking in revenues of $34 billion, up slightly from the previous year. The budget contains no tax increases.

The government of Premier Ed Stelmach plans to cover the deficit for Alberta Health Services, the province-wide health board, at $542 million for the current fiscal year and $759 million in 2010-11, with the latter number including $40 million in pension adjustments for AHS staff.

AHS is also getting a $512-million — or six per cent — increase in its base funding.

Overall, health-care spending will rise to $14.85 billion from $12.74 billion.

The province is also raising the possibility of Alberta's first public-sector job losses since the 1990s. While the final numbers have not been determined, the layoffs could amount to about 250 full-time jobs.

Education funding will rise slightly, increasing 0.7 per cent — or $43 million — on an overall budget of $6.1 billion.

The province's "rainy-day" Sustainability Fund — built from budget surpluses in previous years — is estimated to end the 2010-11 year at $8.6 billion, down from the $15 billion forecast for the end of 2009-10.

The fund is forecast to sit at $2.8 billion by the end of the 2012-13 fiscal year.

15 departments face cuts`

Treasury Board President Lloyd Snelgrove defended the government's spending decisions.

"While it's all right to suggest we could cut $5 billion, I would feel a lot more comfortable if they [critics] could show Albertans where they would like to cut the $5 billion from and see if Albertans support longer waiting lists, no roads, 60 people in the classroom," he said.

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Finance Minister Ted Morton, left, and Treasury Board president Lloyd Snelgrove listen to a reporter's question at the Alberta legislature Tuesday. ((Michelle Bellefontaine/CBC))

"I quite frankly think we are one of the few places that has the courage to talk about addressing health care on an ongoing basis and not being afraid to fund it."

In last year's budget, the government said it would have to find $2 billion in cuts if the economy didn't improve. A total of $1.3 billion was found and put toward health care because the economy is showing signs of recovery.

According to Morton, about eight ministries saw increases to their spending, while 15 will face reduced budgets.

Children and Youth Services faces a $36-million drop in spending, with nearly $28 million in cuts coming from child intervention services, now budgeted at $382 million. Spending for foster care will be $163 million, an increase of $1 million from the previous year.

Culture and Community Spirit will see a 15.1 per cent drop in its operating budget.

The province plans to maintain the forecasted 2009-10 funding levels for the Persons with Developmental Disabilities program. While it has slightly increased spending on the Assured Income for the Severely Handicapped (AISH) benefit, the maximum monthly income amount of $1,188 will remain the same.

Alberta school boards will see a 4.6 per cent — or $246 million —increase in the money they get for their operating budgets, which will total $5.6 billion in 2010-11.

Morton lost credibility, Wildrose leader says

The amount of government spending was slammed by the leaders of opposition parties on both sides of the political spectrum.

"We're all going to have to sacrifice? That was a bunch of baloney," said Danielle Smith, leader of the right-wing Wildrose Alliance Party. "We knew it was all rhetoric and that we were going to see a sea of red ink but, man, I didn't expect this."

"This budget shows they've given up any hope of controlling spending ... I think that minister Morton has lost a lot of credibility today by putting his name to this train wreck."

Smith said her party has come up with some alternatives that will be announced at a press conference Wednesday.

Liberal Leader David Swann said he was shocked by the amount of spending.

"They're addicted to spending and not looking at where the money is going," he said, singling out the government's decision to cover the AHS deficit. "They're simply covering their asses."

Swann said he will call for an audit on health-care spending.

While Alberta NDP Leader Brian Mason had less of a problem with the amount of spending, he was concerned about the long-term effects of relying on the Sustainability Fund to reduce the deficit.

"It's postponing a greater problem and Alberta's revenues have not kept up with the expenditures," he said.

Concerns about the Sustainability Fund were shared by Scott Hennig, Alberta director of the Canadian Taxpayers' Federation.

"That's supposed to get them through the next two years?" he asked. "Good luck ... not if they're going to continue to run deficits at almost $5 billion a year."