Standard and Poor's downgrades Alberta's credit rating a second time

Standard and Poor’s says the province will need to implement a sales tax “to halt weakening finances” unless there is a major rebound in resource revenues.

Province's rating goes from AA+ to AA over reluctance to introduce taxes to tackle low revenue

Finance Minister Joe Ceci takes questions from reporters about Alberta's latest downgrade. (CBC)

Standard and Poor's has downgraded Alberta's credit rating for the second time in five months.

The bond rating agency has dropped Alberta's rating from AA+ to AA. It last downgraded Alberta in December when it removed the province's long-lauded triple-A rating. 

"The negative outlook reflects continuing uncertainty about the province's willingness to take additional fiscal measures to improve its structural  budget shortfalls within the next two years," the rating agency said.

Standard and Poor's says the province will need to implement a sales tax "to halt weakening finances" unless there is a major rebound in resource revenues.

The report also raises concerns with Alberta's dramatic jump in borrowing. Debt is forecast to hit $57.6 billion by 2019.

Finance Minister Joe Ceci repeated his assertion that Alberta will not introduce a sales tax.

"What will help our financial position in the long term is a better economy," Ceci said. "And a better economy will only come if we diversify our economy and don't rely so much on oil and gas as we have in the past."

Wildrose Leader Brian Jean said he is not surprised by the downgrade because the government wants to remove the borrowing cap while having no debt repayment plan.

Salary cuts, not sales tax, says Wildrose

When asked if the government should introduce a sales tax to stop the credit downgrades, Jean said they should cut salaries instead.

"This is a situation where Albertans are taking 10 per cent, 20 per cent, 30 per cent cuts in pay if not a 100 per cent cut in pay," he said. "And meanwhile, the most expensive part of government is wages and this government is putting those public sector wages up.

"It shows they do not have any real intentions of doing anything other than raising taxes."

Interim PC leader Ric McIver said the credit downgrade will raise borrowing costs for municipalities as well as the province.

"Now there is a snowball effect that is operating against the government's interest in a very big way," he said. "The warning lights are flashing and they are asleep at the switch."

McIver said the PCs are "deadset" against a sales tax. 

Earlier this year, DBRS and Moody's rating agencies downgraded Alberta's triple-A credit rating.