The provincial NDP government has officially tabled their first budget, with it comes a change in both corporate and income tax, increased funding levels and a major deficit.
Local politicians, however, aren't overly concerned with the new budget saying it was exactly what they had prepared for.
“I'm not surprised by the provincial budget laid out by the NDP. They've ran and continued to govern based on their policies and positions laid out during the provincial election. People are a bit caught off-guard by some of the budget but this is exactly what they ran on,” said Mayor Craig Copeland.
Back in March, many Albertans were up in arms over the former PC government's budget. During the election the NDP campaigned that, if elected, they would throw out the flat rate income tax, and restore dollars for healthcare and education. They didn't go above and beyond their promises, but instead stuck precisely to their election platforms.
“I believe they brought in the budget that they said they were going to do,” said Coun. Vicky Lefebvre. “I believe they met all of their promises, they've kept their word. We shouldn't be surprised; they said they were going to do these things and they did.”
One change between their election platform and now is finance minister Joe Ceci pushing the year Alberta's budget will be balanced to 2020. Starting this year, the government is projecting a $6.1 billion deficit. In 2016/'17 the deficit is expected to be $5.4 billion, in 2017/'18 there will be a $4.4 billion deficit and in 2018/'19 Alberta will have a final deficit of $2.1 billion.
“I understand going into debt but when you have to do infrastructure and you're behind on the amount of infrastructure, as we are within the province of Alberta, you're going to have a deficit budget,” said Lefebvre. “My concerns are long range. I understand we have to spend today in order to make things better for tomorrow, but we also have to have an end in site.”
During his speech, Ceci cited a drop in resource royalties from $8.9 billion last year to just $2.8 billion this year as the reason for the deficit.
“I wasn't surprised they are going to borrow money to do more capital (projects), that didn't come as a shock. The only concern I have is the borrowing money to just balance the operating side of the house,” said Copeland.
Most of that borrowing will be put towards infrastructure, with $34 billion going to infrastructure projects over the next five-years, including $4.4 billion for new projects and programs. The capital plan commits $8.6 billion to municipal infrastructure, $706 million to water and wastewater projects, and $454 million to community facilities.
Funding to the Municipal Sustainability Initiative (MSI) was increased by just $100 million, for a total of $3.9 billion over five-years.
While they don't know the specifics of when or if money will make it's way into the Lakeland, Copeland was pleased to see at least a portion of what he refers to as the forgotten highway getting some attention.
“As far as Highway 28, at least the highway is making it into that capital. So that's what we have to focus on is getting the rest of Highway 28 in there,” Copeland said. “It was encouraging that Highway 28 made the radar, how much of the highway is going to make the funding in the next three years, we're going to have to find out.”
Projects like the wastewater treatment plant in Cold Lake, the regional waterline, upgrades to local hospitals and schools are all items local politicians will be watching for. With large cities like Calgary and Edmonton typically eating up a large chunk of government funding, Copeland expressed that they will have to push hard to get their voices heard.
“The next four years, it's going to be fascinating to see if our area with two different types of governments in power now, did our area benefit from the change in government? As elected officials we just have to try to work with the NDP government. If they're going to be investing in the capital budget, we just got to get in there and stick handle to get some projects in our area.”
Albertans will be directly affected by the new provincial government's budget, with the introduction of a progressive income tax system. Instead of the flat 10 per cent income tax, high earners will be paying more in taxes while lower earners get a break.
“I hope it achieves what it is they want to accomplish. My personal belief is that I feel everybody should be treated equally on the tax side, but we seem to want to penalize people that are getting paid well,” said Copeland.
Lefebvre, on the other hand, was in favour with the change.
“I think, personally, it's a good thing. It's another way of getting revenue and I think it's fair. If I'm being taxed on $50,000 and then someone on $100,000, that 10 per cent is going to take a bigger bite out of a smaller salary,” said Lefebvre.
At the same time, the corporate tax rate will be put up to 12 per cent. Copeland explained that that's where his main concern with the changes to income tax lies; that successful business owners will now have two tax hikes to deal with.
“In some cases, those are the people that have taken a lot of risks and because they've done well they're getting penalized. I'm just concerned, I've been hearing from a couple of business people that they get taxed now on the increase with the corporate tax and their personal income tax when they start drawing money out of their company.”
The changes to income tax come at a time when the NDP is currently undergoing their royalty review, and recently increased minimum wage in the province. Like many, Copeland believes it's too much all at once, noting that he's already heard of some area businesses moving over to Saskatchewan instead.
In an effort to help create jobs in the province, Ceci announced a job creation incentive that offers businesses $5,000 for each job created.
Other highlights of the budget include an additional $525 million in drought and wildfire relief, a two-year post-secondary tuition freeze, the restoration of education and healthcare dollars, $15 million to women's shelters and an additional $25 million to FCSS. The provincial government also froze the salaries of MLAs and cabinet ministers for the entire term.
Those who purchase cigarettes or alcohol have probably already noticed they have gone up in price. Included in the budget announcement was a $5 per carton increase on cigarettes, a 750 ml bottle of hard liquor costs 18 cents more, and the price for a case of beer also went up 21 cents.
