The Alberta government is counting on a rebounding economy to bring the province into the black, while leaving taxes where they are and increasing spending.
The proposed budget projects a deficit of $886 million in the year ahead, followed by surpluses of $952 million in the 2013-2014 fiscal year and $5.2 billion the following year.
The government expects to bring in $40.3 billion in revenue next year and shell out $41.1 billion on programs and services. The deficit figures don't include $1.1 billion in capital spending along with several other cash adjustments, which will see the sustainability fund slide from an estimated $7.4 billion at the end of this fiscal year to $3.7 billion by the end of the next.
There are no tax increases in the budget and it promises enhanced Assured Income for the Severely Handicapped (AISH) payments, higher grants for school boards, universities and colleges and continued increases to spending in health care.
Finance Minister Ron Liepert said the budget was a direct response to what the government heard from Albertans over the past year. He said the government was prudent and responsible, while also keeping important services well-funded.
"Everyone knows we are going into an election campaign and yet this is not a budget that lays out a whole bunch of things that the province can't afford. On the other hand, this is not a budget that has a lot of deep cuts," he said in a news conference prior to his official budget speech.
In contrast to Tuesday's throne speech, which proclaimed that, "Alberta's current fiscal framework relies too heavily on volatile energy revenues as a source of income," this budget and the plan for the next two years will see the province continue its heavy reliance on energy royalties.
Combining new projects that are set to come on stream with expected higher resource prices, the government is expecting to see royalties from oilsands bitumen rise from $4.3 billion this year to $5.6 billion next year, climbing to $7.6 billion in 2014 and nearly $10 billion by 2015, when the province projects a surplus in excess of $5 billion.
With resource revenues projected to climb, the government will be more susceptible to changes in prices. The province has estimated oil prices for the budget year will average $99.25 in U.S. dollars. Every dollar that average is off changes the budget by $223 million, meaning a tumble in prices could be disastrous for the books. By contrast, the sensitivity of the 2011 budget was $141 million for every dollar of oil price fluctuation.
The budget estimates the Canadian dollar will average $100.3 U.S. For every cent the dollar rises above that prediction, the government will be out $247 million, compared to $154 million in the 2011 budget.
While the worst could happen, Liepert believes it's just as likely that oil prices could go the other way.
"We could just as easily have a $1 increase in oil from what we are projecting," he said. "I don't wake up every morning thinking negative. I think positive and I think that is exactly where this budget is going, and it is not only positive, it is realistic and it is responsible."
Increases
The AISH payments, which Premier Alison Redford has promised to increase, will rise from $1,188 per month to $1,588 per month and the province will also double to $800 the amount of money someone on AISH can make without having the province claw back benefits.
The budget also includes increased daycare subsidies for lower income parents.
In education, the budget includes funding for a one per cent wage increase to Alberta teachers, with funding also available for two per cent increases in two subsequent years. The Alberta Teachers' Association has yet to sign a deal on a contract that expires in late August.
Alberta doctors are also without a long-term contract with the province and there is no funding currently allocated for any increase they might have coming.
The government is promising a further review and ongoing discussion with Albertans about how the province conducts business, but that likely won't come until after the election.
Liepert said the government has no plans to prejudge those outcomes with a prescribed budget and wants to hear what Albertans have to say first.
"We have no plans to go out and tell people what they should be suggesting to us, as some of our so-called critics have been saying. We want to go out and listen to Albertans," he said.
"Surely to goodness talking to Albertans, listening to Albertans and then reacting to what Albertans have to say is just good politics."
Opposition unimpressed
Opposition parties criticized the government for adopting overly rosy revenue projections.
"It looks like Alison in Wonderland to us," said Wildrose leader Danielle Smith. "She is looking at seeing our resource revenues go up by 40 per cent over the next two years. These are fantasyland projections."
Smith accused the government of a bait and switch and said, after the election when the revenues don't materialize, taxes will go up instead.
"I think she needs to tell Albertans how she is going to raise our taxes and how much she wants to raise our taxes," Smith said.
The Wildrose released its alternative budget on Friday morning. It predicts a modest surplus of $16 million. To achieve that the party would cut capital spending by $1.6 billion and cut the increase in operational spending as well.
The party would still increase spending, but also argued it would target this increased spending at the front lines of government services, adding teachers and nurses, while cutting management staff. The Wildrose would also impose a public sector wage freeze.
NDP leader Brian Mason also cried foul on the government's projections, but believes there will be a different response when the numbers don't pan out.
"As we predicted this is a goody budget designed to get them through the election," he said. "We think they have overestimated revenues."
He said Conservatives don't respond to budget problems with tax hikes.
"We are not dealing with Liberals or New Democrats in the government. We are dealing with Conservatives and that is what they do," he said. "There is no indication that the government is actually going to raise taxes on the wealthy or on corporations where they were cut in the first place."
Alberta Liberal leader Raj Sherman said the government isn't being honest with Albertans and are avoiding tough topics.
"They do not have the courage to discuss the real issues when it comes to budget," he said.
Sherman's own platform, which he announced earlier this week, called for an increase to income taxes for anyone making over $100,000. He said the PC budget was simply another part of the campaign.
"It is an election budget. Where were these things for the last two years and where are they going to be after the election?" he said.
Sherman also slammed the government for failing to budget for an increase to doctors' fees.
Alberta Party leader Glenn Taylor said Albertans are up to the challenge of a full conversation on the issues, but the government has to want to listen.
"To say, 'don't worry, elect us and we are going to talk to you after' — it is not what Albertans are looking for," he said. "We should be having the conversation about what kind of services Albertans expect and how much they are willing to pay for them."
