Alberta deficit projected at $4.7B
Last Updated: Wednesday, August 25, 2010 | 5:28 PM MT
Alberta Finance Minister Ted Morton delivers his first-quarter update at the provincial legislature in Edmonton Wednesday. (CBC)Alberta's deficit is projected to be $4.7 billion at the end of the current fiscal year, according to figures released Wednesday by Finance Minister Ted Morton.
The figure, just $7 million more than forecast in the budget, was contained in Alberta's first-quarter fiscal update for 2010-11 released by Morton at the provincial legislature in Edmonton.
The province says faltering markets, a stronger Canadian dollar, lower prices for natural gas and fluctuating oil prices continue to be factors contributing to the deficit.
"There is some good news," Morton said. "Canada is doing better than any other Western nation. Alberta is doing better than any other province.
"But we are an export-based economy, so what happens in the global economy affects us here at home."
The province ended its 2009-10 fiscal year with a $1-billion deficit.
But when he announced his 2010-11 budget in February, Morton projected the province would end up with a $4.7-billion deficit at the end of the fiscal year. Part of the projected deficit is the result of a government decision to increase health-care spending by 16.6 per cent.
According to the figures released Wednesday, revenue is projected at $34.6 billion, an increase of $602 million from the budget projection.
More corporate tax revenue
Provincial coffers have been helped by an increase in land sales and stronger corporate tax revenue. The increase is offset by a decrease in personal income tax and investment income.
Expenses have now increased $609 million to $39.3 billion, because of disaster and emergency funding due to floods in southern Alberta, drought and spring wildfires.
NDP Leader Brian Mason says instituting a progressive tax rate would give Alberta another $5 billion in revenue. (CBC)The Sustainability Fund is forecast to end the year at $11.2 billion, which marks a $3-billion increase from the budget. The province intends to dip into that fund to cover the deficit, as it did last year, Morton said.
"We'll continue to take a balanced and cautious approach to budgeting," he said. "We'll keep a close eye on spending. We'll protect the programs and services that Albertans value most."
The Heritage Fund lost $282 million in its value during the last quarter. The savings account was worth $14.1 billion on June 30.
Alberta NDP Leader Brian Mason said the province is creating the deficit with its own policies, particularly by applying an equal tax rate to all Albertans, no matter what their income. Changing that policy could add another $5 billion annually to government coffers, he said.
"The tendency has been to blame the deficit on a decline on natural resource revenue ... but the government's policy in respect to flat income tax has given a huge tax benefit to the very wealthiest of Albertans."
Mason believes the province relies too heavily on revenue from non-renewable resources and predicts that the economic situation will likely get worse.
Alberta has earned much of its resource revenues from natural gas extraction, but earnings have been dropping because production has shifted to large shale gas discoveries in the United States, Mason said.
Wildrose Alliance Leader Danielle Smith says the Alberta government likes to blame its financial woes on outside events when it just spends too much money. (CBC)Wildrose Alliance Leader Danielle Smith slammed the government, saying it was spending too much money and always blaming outside factors for the deficit.
"Blame the U.S. because they're not out of the recovery yet, blame the world economy because it's volatile, blame the fact that we didn't budget properly for disaster relief," she said.
"I think what we need to start seeing is some budgeting for disaster relief. We know disasters happen each and every single year."
Introduction of sales tax rejected
The deficit has led to calls for Alberta to introduce a provincial sales tax.
Morton suggested that option might one of many looked at by the Premier's Council on Economic Strategy but acknowledged it might be a hard sell.
"Albertans are rather happy with the fact — even proud of the fact — that there isn't a sales tax in this province and for the time being this government doesn't have any intention of changing that," he said.
The idea of a sales tax was also dismissed by opposition parties.
"We have plenty of revenue," Liberal MLA Hugh MacDonald said. "It's how we spend that revenue. We don't need a sales tax."With files from The Canadian Press
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