The Alberta Government tabled its 2013 budget last week and as many were expecting, the province is running a deficit.
“We're in a deficit,” Finance Minister Doug Horner said during a budget-day press conference. “I'm not hiding the fact that we're in a deficit. We're having a tough time here.”
Alberta is facing a nearly $2 billion deficit and is borrowing about $4 billion to pay for capital infrastructure projects, for a total shortfall of more than $6 billion in 2013-14.
“We could have cut another billion dollars out. That would have been great for numbers but it's not the responsible thing to do,” Horner added.
Horner pointed out that in the face of a growing deficit, the province still has a significant sum of assets, which he said will total more than $44 billion in the coming years.
Alberta's finances have largely been tied to its boom-bust economy, and in response to declining resource revenues from lower oil prices over the past year, the government chose to cut spending, but despite those cuts was still forced to run a deficit.
However, Bonnyville Deputy Mayor John Irwin, who was at the budget announcement on March 7, said he doesn't necessarily see it as a negative to borrow money right now.
“With the current interest rate and Alberta's AAA rating within the financial community, I think it's a good time to be investing in Alberta,” he said. “We have many people moving to the province, many with children. We have to continue to invest in the province even if we have to run a deficit to do it.”
Irwin said he does not believe the budget put forth will have any immediate negative effects on Bonnyville.
“Municipal Affairs hasn't been hit at all, MSI (Municipal Sustainability Initiative) is still in place, so I don't think we'll be hit that hard by this budget.”
He said, “It's not a Ralph Klein budget, but it is a conservative one.”
Genia Leskiw, PC MLA for Bonnyville-Cold Lake, said it was a “tough budget, but a realistic one.”
She said, despite the deficit and continued spending on infrastructure, the government is still committed to saving, by putting a portion of resource revenue back into the Heritage Trust Fund.
In order to do that, Leskiw said the government will need to find ways to increase resource revenues.
“One way to (increase revenues) is to open up to new markets. That, along with investing in families, education and health care are priorities for this government.”
She said cuts had to be made, but at this point in time, investing in Alberta is still a priority.
“It's hard to please everyone. On one side they call for more cuts, on the other they say we are cutting too much. We did our best to make the responsible decisions when it came this budget.”
MD of Bonnyville Reeve Ed Rondeau was concerned with a few aspects of the budget, pointing specifically to the cancellation of the resource road program, which provides funding to maintain and rebuild roads heavily used by industry.
“They've taken out the resource road program, so we will be holding a meeting with CNRL right away to discuss how to go about funding the paving of Bear Trap Road,” said Rondeau.
Another cut that will affect the area is the cancellation of STEP (Student Temporary Employment Program).
“We will still be hiring students this summer, like we always do, and I'm sure many other businesses in the area will continue to hire students, but this might affect the number of students we are able to hire.”
Rondeau said he had mixed feelings about the budget and running a deficit, noting that borrowing money is often a “double-edged sword.”
“You like to see continued investment and if you have to borrow to do that, you just hope the ones borrowing are responsible enough to manage that debt properly.”
Shayne Saskiw, Wildrose MLA for Lac La Biche-St. Paul-Two Hills was more critical of the government running a deficit.
“It took a generation to pay off Premier Getty's debt and it's going to take another generation to pay off the $17 billion that's going to be racked up by 2016,” said Saskiw.
“It's troubling because there's no plan on how it will be paid back. In the last five years, there's been record revenue, and despite a strong economy, and low unemployment we have a deficit. It's shocking that we've squandered the wealth. There should be no need to go into debt in a province like Alberta.”
Following the release of the PC budget, the Wildrose announced a financial recovery plan meant to eliminate deficit by 2014 and keep Alberta out of debt. The proposed plan promotes spending limited to inflation and population growth.
Saskiw added, “Our recovery plan is meant to eliminate government waste, trim bureaucracy and management, hold the line on wages, invest in infrastructure, and protect frontline workers,”
The provincial government has stated the budget will not include any new taxes or any increases in operational spending. But it does include a new Fiscal Management Act that “strengthens rules for saving, spending and borrowing, and sets the stage for Alberta to reduce its reliance on natural resource revenue,” according to the provincial government's website.
