Alberta second-quarter budget forecast shows slight improvement
Second-quarter financial figures released Monday by the Alberta government suggest the economy is starting to stabilize but recovery is taking longer than expected.
The deficit is now projected at $10.8 billion, a decrease of $78 million from the first-quarter update.
That amount is still $449 million higher than what was forecast in the 2016 budget, released in April.
Despite these numbers, Finance Minister Joe Ceci is seeing better times ahead.
"The province's economy is now showing signs of stability," he said. "Many major economic indicators are levelling off and business output is slowly improving."
The Alberta economy has been pummeled by a decrease in the price of oil over the past two years. The government is forecasting the price of oil at $45 US a barrel this quarter, up slightly from the $42 US projected in the budget.
The province added 25,000 jobs in the second quarter, which covers the period from July 1 to Sept. 30. That figure includes 18,000 in oil and gas, due to an increase in drilling, and 3,000 jobs in construction.
However, those gains were offset by job losses in the service sector, including 7,500 in finance, insurance and real estate, 6,300 in information and culture and 2,600 in health care and social assistance.
Corporate income tax took a major hit. The province is forecast to collect $877 million less from businesses in this fiscal year than was projected in the budget.
Spending for income support and Assured Income for the Severely Handicapped programs increased by $100 million over what was budgeted — another sign of the poor economy.
Disaster assistance is $1.1 billion higher than forecast, mostly due to the May 2016 wildfire in Fort McMurray.
Fort McMurray disaster assistance is forecast to cost $647 million. Firefighting costs are listed at $369 million, and the government lost about $300 million in revenue mostly due to a reduction in corporate income taxes.
After taking federal funding into account, the cost of the wildfire is estimated at $520 million.
Government debt for the year is projected to be $31.2 billion, $697 million higher than budgeted.
The government is spending $1.024 billion on debt servicing costs.