Oil prices slid below $80 this week and with that slide, concerns about the province's financial picture began to rise.
In the spring budget the government projected an average oil price of $99.25. Though prices have been much lower than that so far this year, Finance minister and local MLA Doug Horner said there is no reason for alarm just yet.
"Are we watching it closely? Obviously we are watching it closely, but are we going to be waiting and making our adjustments based on the quarterly reports that we do? Yes."
The $99.25 forecast is an average for the entire year and Horner said there is time for prices to rebound and for other economic factors to change. Every dollar that the oil price remains under that target costs the province $223 million.
The province is projecting a deficit of $886 million this year, followed by a return to surplus in the years ahead.
Horner said the government is keeping an eye on expenses, but stressed there is a full year ahead for the provincial budget. The government's fiscal year begins April 1.
"We don't budget on a moment, we budget on a year, so my focus right now is expenditure control," he said.
Updates on the first quarter of the current fiscal year are expected late this summer. Horner said he's prepared to wait for those results before taking any significant steps.
"We have options around a whole raft of things, but there is not a lot of sense going down those roads and getting a lot of people concerned about it until we actually see whether we are going to do it," he said.
Opposition unimpressed
Opposition MLAs were uninterested in Horner's wait-and-see approach.
"They got to quit spending like drunken sailors. They have to quit it. They have to stop promising everything to everybody and start prioritizing needs before wants," said Wildrose MLA Rob Anderson.
Anderson said his party warned during the election that the government's finance projections were too rosy and Horner is wrong to be ignoring the situation now.
"It is going to blow a massive hole in our budget and will probably spell an end to our savings fund and an official return to debt financing for this province," he said.
Other parties agreed on the problem, but had a different proposed solution.
"Alberta's revenue streams are broken and we as a society have to learn to pay for what we use through taxation," said Alberta Liberal MLA Kent Hehr. "We simply can't continue to spend all of the royalty money at once."
The Liberal election platform called for an end to the province's flat income taxes, with increases for higher income earners and corporate tax hikes as well.
NDP leader Brian Mason said the government's over-reliance on energy revenues puts important public services at risk every time those prices crash.
"About 30 per cent of our program spending is based on royalty revenue and that means that every time the price of oil drops we are faced with laying off nurses or teachers or raising taxes," he said.
He said the flat tax is unique to Alberta and is unfair to lower income earners.
"I think that it is important that the government review the tax burdens of different groups in our society."
While the oil price numbers are troubling, Horner believes there could be other positive economic signs in the budget from corporate and personal income taxes.
He said the government plans to talk about Alberta's reliance on energy revenues, as part of a larger discussion on the province's saving and long-term fiscal future.
