‘Painful’ cuts, billions in borrowing in Alberta budget
bootlegga @ Fri Mar 08, 2013 9:29 am
$1:
EDMONTON - Alberta will borrow billions and drain the provincial savings account in a “painful” new budget that holds the line on program spending and public-sector salaries.
In the 2013-14 fiscal year, the Progressive Conservative government will run a $1.97-billion deficit, borrow $4.3 billion for new infrastructure and withdraw $2.1 billion from the Sustainability Fund savings account, leaving the balance at $691 million, down from $17 billion in 2008.
Premier Alison Redford broke her promise to stay out of debt and to avoid an operating deficit. She won’t provide three-year stable funding increases to municipalities and schools. Her $200-million election promise to implement full-day kindergarten went unfunded, as did the $3-billion pledge to revive the Alberta Oil Sands Technology and Research Authority, meant to develop new energy technology.
All but six departmental budgets were cut, and those that were spared — including health, education and municipal affairs — saw modest increases below what they were promised.
“That’s going to be painful for a lot of folks,” Finance Minister Doug Horner said Thursday. “We took $2 billion out of what we were planning on spending: We took $500 million out of our capital (budget), we took close to $1.5 billion out of our operating side.”
“That is what is going to enable us to start building back our net financial assets. … If you don’t build those capital assets, you can’t expand the economy.”
Redford also kept some of her promises: She did not raise taxes. Her government has budgeted $503 million over the next three years to start building 50 new schools and upgrading 70 more, a promise that will ultimately cost $2 billion over the next six years.
She pledged to build 140 new family-care clinics before the next election, and her government has budgeted $50 million for planning this year, plus $60 million on capital construction over the next three years.
The province will spend $442 million to twin sections of Highway 63 to Fort McMurray and plans to spend $500 million on post-secondary construction projects, including buildings at NAIT and NorQuest.
Saving and Borrowing
The government expects to find $400 million in savings through the year and the new Fiscal Management Act will force government to start saving resource royalties. In three years, the province aims to have $4.5 billion in the Sustainability Fund, renamed the Contingency Fund.
Starting in 2015-16, the province plans to stop spending revenue generated by the Heritage Savings Trust Fund, choosing to reinvest the money instead. The fund currently sits at $14.8 billion.
The province will record a $451-million operating deficit in 2013-14, the first budgeted operating deficit in 20 years. The overall deficit in 2013-14 will be $1.97 billion, compared to $3.9 billion in the current 2012-13 fiscal year.
In addition, the government will borrow $4.3 billion to pay for 80 per cent of its estimated $5.2 billion in new construction projects, using bonds and public-private partnerships (P3s).
By March 2014, the province will be $8.2 billion in debt, when combined with previous borrowing by the Ed Stelmach government and money owed for schools and ring roads already built through P3s.
That debt will grow to nearly $17 billion by March 2016.
‘Broken Promises’
“This premier is plunging this province back into debt,” Wildrose Leader Danielle Smith said. “We’re going to have massive, billion-dollar debts for the foreseeable future.
“They have taken … $17 billion in savings and turned it into $17 billion worth of debt.
Smith called it the “back-in-debt” budget, while NDP Leader Brian Mason called it the “broken promises” budget.
“This government has broken faith with the people that elected it,” Mason said. “There are cuts in education … there are cuts to all sorts of family services, to a drug program for seniors, mental health is cut. We’re seeing an across-the-board attack on low-income (people) and Albertans with special needs.
“We don’t believe that a deficit is necessary in a province as wealthy as Alberta is, if everybody pays their fair share.”
Liberal Leader Raj Sherman said Alberta should bring back a progressive income tax and implement a modest increase in corporate taxes.
“Redford’s bankrupt budget will hurt people,” Sherman said. “The economy in Alberta is very good. Why can’t the Redford Conservative government balance the books? Why can’t they provide Albertans with the services they need?”
Winners, losers
Health care was one of the few areas to see an increase in overall spending, but the province is providing less funding than expected to Alberta Health Services, and no new money to pay physicians.
With a total budget of $17.1 billion, health care now accounts for 45 per cent of the province’s total operations budget. About $10.5 billion of that money will go to AHS to operate front-line services, a three-per-cent increase that is well below the promised 4.5-per-cent hike.
Universities and colleges were hard hit, with a three-per-cent cut in their base operating grant. The $2 billion in base funding was cut by $147 million, reversing a promised increase of two per cent. Universities need an increase of four per cent to keep up with inflation, so the reduced funding will put a major squeeze on their budgets.
Alberta’s education budget will be $6.2 billion in 2013-14, a marginal $44-million increase from the previous year. Redford won’t make good on a promise to increase per-student grant money to school boards, instead freezing those per-student grants for the next three years.
The education budget also ends a $22-million grant program that helped school districts pay for fuel, as well as a $41-million grant for the Alberta Initiative for School Improvement, which allowed schools to run pilot projects in such areas as literacy and health.
There is no money to hire additional teachers or cover salary increases for about 35,000 teachers currently negotiating contracts with Alberta’s 62 school districts.
Redford will not keep her promise to increase funding for the Municipal Sustainability Initiative, money communities can use for work on roads, bridges, parks, cultural, recreational and other infrastructure. The MSI fund gets $896 million instead of the $1 billion pledged for this year. Edmonton will get $170 million from the fund in 2013-14.
The budget provided for no increase in salaries for teachers and nurses whose unions are heading into bargaining this spring.
The province anticipates revenues of $38.6 billion in 2013-14, of which $7.3 billion (19 per cent) will come from non-renewable resource revenues.
Provincial projections call for oil prices to gradually improve over the next three years, as new pipeline projects come on stream across North America and pop Alberta’s so-called “bitumen bubble.”
That should boost average annual prices for Western Canada Select, Alberta’s benchmark grade, to roughly $75 US per barrel range, up from just over $68 this fiscal year.
Those estimates assume that key pipelines such as Keystone XL get built, and that the price of North American benchmark West Texas Intermediate holds in the low to mid $90s range, as most private sector forecasters expect.
In the 2013-14 fiscal year, the Progressive Conservative government will run a $1.97-billion deficit, borrow $4.3 billion for new infrastructure and withdraw $2.1 billion from the Sustainability Fund savings account, leaving the balance at $691 million, down from $17 billion in 2008.
Premier Alison Redford broke her promise to stay out of debt and to avoid an operating deficit. She won’t provide three-year stable funding increases to municipalities and schools. Her $200-million election promise to implement full-day kindergarten went unfunded, as did the $3-billion pledge to revive the Alberta Oil Sands Technology and Research Authority, meant to develop new energy technology.
All but six departmental budgets were cut, and those that were spared — including health, education and municipal affairs — saw modest increases below what they were promised.
“That’s going to be painful for a lot of folks,” Finance Minister Doug Horner said Thursday. “We took $2 billion out of what we were planning on spending: We took $500 million out of our capital (budget), we took close to $1.5 billion out of our operating side.”
“That is what is going to enable us to start building back our net financial assets. … If you don’t build those capital assets, you can’t expand the economy.”
Redford also kept some of her promises: She did not raise taxes. Her government has budgeted $503 million over the next three years to start building 50 new schools and upgrading 70 more, a promise that will ultimately cost $2 billion over the next six years.
She pledged to build 140 new family-care clinics before the next election, and her government has budgeted $50 million for planning this year, plus $60 million on capital construction over the next three years.
The province will spend $442 million to twin sections of Highway 63 to Fort McMurray and plans to spend $500 million on post-secondary construction projects, including buildings at NAIT and NorQuest.
Saving and Borrowing
The government expects to find $400 million in savings through the year and the new Fiscal Management Act will force government to start saving resource royalties. In three years, the province aims to have $4.5 billion in the Sustainability Fund, renamed the Contingency Fund.
Starting in 2015-16, the province plans to stop spending revenue generated by the Heritage Savings Trust Fund, choosing to reinvest the money instead. The fund currently sits at $14.8 billion.
The province will record a $451-million operating deficit in 2013-14, the first budgeted operating deficit in 20 years. The overall deficit in 2013-14 will be $1.97 billion, compared to $3.9 billion in the current 2012-13 fiscal year.
In addition, the government will borrow $4.3 billion to pay for 80 per cent of its estimated $5.2 billion in new construction projects, using bonds and public-private partnerships (P3s).
By March 2014, the province will be $8.2 billion in debt, when combined with previous borrowing by the Ed Stelmach government and money owed for schools and ring roads already built through P3s.
That debt will grow to nearly $17 billion by March 2016.
‘Broken Promises’
“This premier is plunging this province back into debt,” Wildrose Leader Danielle Smith said. “We’re going to have massive, billion-dollar debts for the foreseeable future.
“They have taken … $17 billion in savings and turned it into $17 billion worth of debt.
Smith called it the “back-in-debt” budget, while NDP Leader Brian Mason called it the “broken promises” budget.
“This government has broken faith with the people that elected it,” Mason said. “There are cuts in education … there are cuts to all sorts of family services, to a drug program for seniors, mental health is cut. We’re seeing an across-the-board attack on low-income (people) and Albertans with special needs.
“We don’t believe that a deficit is necessary in a province as wealthy as Alberta is, if everybody pays their fair share.”
Liberal Leader Raj Sherman said Alberta should bring back a progressive income tax and implement a modest increase in corporate taxes.
“Redford’s bankrupt budget will hurt people,” Sherman said. “The economy in Alberta is very good. Why can’t the Redford Conservative government balance the books? Why can’t they provide Albertans with the services they need?”
Winners, losers
Health care was one of the few areas to see an increase in overall spending, but the province is providing less funding than expected to Alberta Health Services, and no new money to pay physicians.
With a total budget of $17.1 billion, health care now accounts for 45 per cent of the province’s total operations budget. About $10.5 billion of that money will go to AHS to operate front-line services, a three-per-cent increase that is well below the promised 4.5-per-cent hike.
Universities and colleges were hard hit, with a three-per-cent cut in their base operating grant. The $2 billion in base funding was cut by $147 million, reversing a promised increase of two per cent. Universities need an increase of four per cent to keep up with inflation, so the reduced funding will put a major squeeze on their budgets.
Alberta’s education budget will be $6.2 billion in 2013-14, a marginal $44-million increase from the previous year. Redford won’t make good on a promise to increase per-student grant money to school boards, instead freezing those per-student grants for the next three years.
The education budget also ends a $22-million grant program that helped school districts pay for fuel, as well as a $41-million grant for the Alberta Initiative for School Improvement, which allowed schools to run pilot projects in such areas as literacy and health.
There is no money to hire additional teachers or cover salary increases for about 35,000 teachers currently negotiating contracts with Alberta’s 62 school districts.
Redford will not keep her promise to increase funding for the Municipal Sustainability Initiative, money communities can use for work on roads, bridges, parks, cultural, recreational and other infrastructure. The MSI fund gets $896 million instead of the $1 billion pledged for this year. Edmonton will get $170 million from the fund in 2013-14.
The budget provided for no increase in salaries for teachers and nurses whose unions are heading into bargaining this spring.
The province anticipates revenues of $38.6 billion in 2013-14, of which $7.3 billion (19 per cent) will come from non-renewable resource revenues.
Provincial projections call for oil prices to gradually improve over the next three years, as new pipeline projects come on stream across North America and pop Alberta’s so-called “bitumen bubble.”
That should boost average annual prices for Western Canada Select, Alberta’s benchmark grade, to roughly $75 US per barrel range, up from just over $68 this fiscal year.
Those estimates assume that key pipelines such as Keystone XL get built, and that the price of North American benchmark West Texas Intermediate holds in the low to mid $90s range, as most private sector forecasters expect.
http://www.edmontonjournal.com/news/edm ... story.html
I think this budget, while far from perfect does a fair job at walking the middle line. The Liberals and NDP would have increased income taxes, corporate taxes and added a sales tax, while the Wildrose probably would have clear cut most of the government - and worse, done so on the backs of the poor and middle class.
While there is debt and a deficit, it has some really good ideas - like borrowing money to fund infrastructure makes a lot of sense - due to cuts throughout the 90s, we have as much as a $7 BILLION infrastructure deficit. Cutting funding will just make that worse and push it off to our children and grandchildren. The cuts are also spread across most departments, and not just social programs like one party would have done.
While I don't like pay freezes, there isn't really any way around it unless we want to add another billion or two to the debt.
But best of all IMHO, is returning to the days of Lougheed and growing the HTF, instead of raiding it to pay for the here and now like every Premier since Getty has done.
All in all, about the best we could expect under the current economic situation and the demands of Albertans.
jj2424 @ Fri Mar 08, 2013 9:36 am
Disgusting, thanks to Stelmach and this liberal we are sliding back down the slope.
DrCaleb @ Fri Mar 08, 2013 10:24 am
Fail budget.
Billions for new Schools and Hospitals, not a penny to hire anyone to work in them.
jj2424 @ Fri Mar 08, 2013 10:29 am
The South Calgary hospital is "open" and still empty. 
andyt @ Fri Mar 08, 2013 10:31 am
DrCaleb DrCaleb:
Fail budget.
Billions for new Schools and Hospitals, not a penny to hire anyone to work in them.
Billions for new Schools and Hospitals, not a penny to hire anyone to work in them.
Yep. like in BC we buy MRI machines but then let them sit idle a lot of the time while people wait for months or even years to get scanned.
Y'all should just bite the bullet and pay some more tax. You have a flat income tax, ours varies from 5 to 15% - seems to me there's room there without hurting the lowest earners. Sales taxes - join the club, supposedly consumption taxes are the best way to go. Use this extra income for ongoing spending, go into debt only for special projects that increase economic activity - like infrastructure.
jj2424 @ Fri Mar 08, 2013 10:41 am
They should have borrowed money for infrastructure projects 4 years ago, when interest rates were going down, now they are about to go up.
bootlegga @ Fri Mar 08, 2013 10:50 am
andyt andyt:
DrCaleb DrCaleb:
Fail budget.
Billions for new Schools and Hospitals, not a penny to hire anyone to work in them.
Billions for new Schools and Hospitals, not a penny to hire anyone to work in them.
Yep. like in BC we buy MRI machines but then let them sit idle a lot of the time while people wait for months or even years to get scanned.
Y'all should just bite the bullet and pay some more tax. You have a flat income tax, ours varies from 5 to 15% - seems to me there's room there without hurting the lowest earners. Sales taxes - join the club, supposedly consumption taxes are the best way to go. Use this extra income for ongoing spending, go into debt only for special projects that increase economic activity - like infrastructure.
I would have liked to see the flat income tax abolished and perhaps made two tier - maybe something like 10% for under 100k and 15% for those over (or something)- but that would have caused a revolt and farmers at the gates with torches and pitchforks!
A sales tax will never fly here because of the ingrained belief that no sales tax is part of the Alberta Advantage.
However, I agree that a sales tax is more equitable than income tax because everyone pays it, all they would need to do is add in refunds like they do with GST for really low income earners.
saturn_656 @ Fri Mar 08, 2013 1:09 pm
$1:
Premier Alison Redford broke her promise to stay out of debt and to avoid an operating deficit. She won’t provide three-year stable funding increases to municipalities and schools. Her $200-million election promise to implement full-day kindergarten went unfunded
You guys couldn't find money for that? Ha! Ontario did! *watches debt spiral out of control*
Thanos @ Fri Mar 08, 2013 1:13 pm
$1:
That debt will grow to nearly $17 billion by March 2016.
And thanks to one horrible politician and the clique of lawyer pigs she surrounds herself with everything we went through back in the 1990's turned out to be worth absolutely nothing. Unacceptable.
