The balloon has officially burst on an “Alison in Wonderland budget,” according to Wildrose MLA Shayne Saskiw, after the government released its first quarter finances for the 2012-2013 years that predicted a deficit that could be as high as $3 billion.
The government had been predicting an $886 million deficit this fiscal year, but lower than expected oil prices played a role in decreased revenues and a projected deficit that could range from $2.3 to $3 billion. Saskiw said the Wildrose had been arguing prior to the April provincial election that the government’s projections for the price of oil, at $100/barrel, was unrealistic.
“We said you should use conservative estimates,” he said, adding that the government countered with the accusation that the Wildrose was “fear mongering.” Now the government is set to run a “multi-million dollar deficit,” its fifth consecutive deficit budget, he said, adding that he feared it had reached the stage where core services, such as health care and education, could be at risk.
“It’s mind-boggling that they still can’t manage the books, with oil at $92 a barrel,” he said, noting that provinces such as Newfoundland and Saskatchewan are balancing the books and set to run a surplus. The Wildrose did propose an alternative budget, using a more conservative estimate for oil, and would still balance the books, said Saskiw. He said the Wildrose would cut what it saw as unnecessary expenditures, such as “corporate welfare,” – for instance, money for carbon capture and storage - as well as cuts to “lavish severances” and the $300 million set aside for MLA office renovations.
He also noted that the government’s savings fund was being depleted. “We now have less money in Heritage Trust Fund than when (former premier Peter Lougheed) was in power,” Saskiw said, noting that interest generated from the fund is going into spending, rather than back into the fund for savings.
Kathleen Range, press secretary for the Alberta Treasury Board and Finance department, acknowledged the deficit was higher than previously expected but that the government had looked at a wide range of forecasts from the public and private sector in setting the price of oil, settling on a forecast that was “a little bit lower than middle of the range.”
The government is still hoping to balance the books by the 2013-2014 year, mainly through savings, while curtailing the projected deficit as much as possible, she said.
There will be a cap on overall operating spending, no budget increases for departments, and department reviews of capital expenditures. The controversial cancellation of a long-planned police training college in Fort Macleod was one example of a belt-tightening measure, said Range. She said the minister has asked the various departments to find $360 million in savings.
The government is also starting its results-based budgeting process in November, which will have departments look at what services they are offering and what value Albertans are getting from these programs, said Range, adding it is expected that there will be “a few savings from that process.”
She encouraged Albertans to share their input on financial spending, with the government starting online consultations this week and budget roundtables to follow in various communities in the fall of this year.
