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Alberta budget puts off reckoning, and big personal impacts, to another day

No deep cuts, no new taxes and no significant new costs increases announced in Thursday's budget.

Anticipated austerity budget did not appear, neither did significant hits to Albertans' bottom lines

The Alberta government unveiled its latest budget on Thursday. (Juris Graney/CBC)

The day of Alberta's fiscal reckoning and any potential big impacts for Albertans has been put off for another day. 

Leading up to Thursday's budget, many expected to see deep cuts across a spectrum of programs and departments, despite Premier Jason Kenney saying that now was not the time for cuts or tax hikes. 

There will be public sector job losses and some budget trims, but deep cuts were not presented. 

Neither are any significant new impacts on the bottom lines of citizens with any significant increases in things like taxes or fees — although those will increase slightly. 

The government did not lay out a plan to balancing the books, given the chaos of the pandemic and its lingering effects, but only said that was critical to establish at a later date. 

So where will Albertans see an increased cost and, in the case of this budget, where won't they?

Tuition

This is the new normal in Alberta since the government lifted the moratorium on tuition fees and directed post-secondaries to find more income on their own. 

Currently, post-secondaries can increase tuition by seven per cent each year and they'll likely continue to do so as government funding decreases for two years and will see a negligible increase in 2023-24.

The government wants schools to cover 52 per cent of their own revenues by 2023-24, up from 47 per cent in 2020-21.

Funding for post-secondaries will fall over the next three years and a portion of base funding will be allocated based on performance metrics outlined by the government. Government officials said Thursday those metrics could be released in the near future. Missing targets means less money for a particular school. 

Income tax

Again, nothing really new here. 

In the 2019 budget, the government announced that it was de-indexing personal income taxes, meaning the amount you're allowed to deduct won't increase each year like it has in the past. 

That essentially equates to a tax increase. 

The government projects de-indexing alone will cost Albertans $110 million in 2021-22, $195 million in 2022-23 and $300 million in 2023-24. 

Fees

In most budgets, skipping to the back of the book to see the table of fee increases is an easy way to find the government sneaking some extra cash, but not so in this budget. 

Camping fees will be going up between $1 and $3, but that's it. 

Job losses and wage cuts

The government plans to cut its spending on wages by about $800 million this coming year through negotiated settlements, attrition and eliminating jobs. 

The biggest impact will be in post-secondaries, where 750 full-time positions are expected to be cut in 2021. 

The government said it could not answer questions on the types of positions to be axed or where the job losses would occur. 

It said that would be a question for each individual institution to answer. 

Environment and Parks was listed in the budget as losing 40 positions, but the ministry says those positions have been lost through attrition over "the past few years" and are just now being reported. 

On the other side of the ledger, Alberta Health Services will see an increase of 2,940 positions and the government says its recovery capital plan will support 50,000 direct jobs and 40,000 indirect jobs. 

New revenue

The government went into Thursday's budget vowing there would be no new taxes, including a much-discussed sales tax. Despite the $18 billion hole in the books, it lived up to that promise.

The government said on Thursday that it did not project possible outcomes on the budget if such a tax was introduced and instead focused on the potential for investment and new jobs due to low taxes in the province. 

What's to come

With no clear path to a balanced budget, the government is instead relying on what it calls "anchors" to measure the province's economic health, chief among them is keeping debt below 30 per cent of GDP. 

It's anticipated the debt-to-GDP will be 24.5 per cent in 2021-22. 

Debt is forecast at $115.8 billion, and servicing that debt will cost $2.3 billion in the coming year. 

And while the government says a review of its revenue structure is important for the future, it also says instituting new taxes now would be the wrong way to go.

Clarifications

  • An earlier version of this story said Environment and Parks would be losing 40 positions, but the government clarified on Friday that those positions were lost through attrition in past years and are just now being reported.
    Feb 26, 2021 11:47 AM MT

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