The Government of Alberta released its budget last Thursday afternoon, which projects a $3.4 billion deficit for 2011-12, but which aims to get back in the black for 2013-14.
“I think it's a good balanced budget," said Ray Danyluk, MLA for Lac La Biche-St. Paul-Two Hills, by phone interview the morning after the budget was released. “Half of the clips I read this morning said we didn't spend enough and the other half are saying that we spent too much. So I think that we did well."
The budget forecasts $39 billion in total expenses and $35.6 billion in revenues, resulting in the projected deficit. There is a gradual decrease in deficit spending predicted in subsequent years, with a $681 million deficit projected for 2012-13 and a $1.2 billion surplus projected for 2013-14. Savings in the sustainability fund will be used to cover the deficits.
Danyluk did note one area of concern is the escalating cost of healthcare in the province. When he was first elected to the legislature 10 years ago, health care spending accounted for about 29 per cent of the budget but now takes up almost 41 per cent of the budget, he said.
“Every time that health care takes more of the pie, others are going to take less and that is municipalities, infrastructure, seniors, social services and agriculture," said Danyluk. “That is why we have to look at every possible way to deliver health care."
Budget highlights include a six per cent increase, or $545 million, to Alberta Health Services' base operating grant and a 4.7 per cent increase, or $257 million, in funding to school boards. The increase in education spending is intended to address priorities such as smaller class sizes, support for students with severe disabilities, teachers' salaries and enrollment growth.
However, according to Maureen Miller, vice-chair for St. Paul Education Regional Division school board, cuts to other education grants will result in a net loss of almost a million dollars for the local school board. She explained that the Alberta Initiative for School Improvement (AISI) grant has been cut in half; currently, the division uses AISI funding to support math, language and student success projects.
“So that impacts all programming," said Miller, explaining that those projects involved teaching staff the new math curriculum and getting effective language programs into schools. “We have been working on these projects for about six years now and … we are actually seeing results, so it is really unfortunate that we are going to lose funding in those areas."
The increase in funding by the government will go directly to meet the government's commitment to an increase in teacher salaries but does not support increases to other staff.
However, Miller noted of the budget, “It is too early to know the impact." The board will be discussing the budget in future meetings.
The Government of Albert budget also indicates an increase of $17.6 billion over the next three years to build hospitals, schools, roads and other public infrastructure.
According to Diana Gibson, research director with the Parkland Institute, a non-partisan research network, the increase in infrastructure spending is one of the good things about the provincial budget.
“The government is right; we are heading into a growth pattern so spending now before it becomes really expensive to buy that infrastructure is prudent," said Gibson.
However, she added that with oil currently priced at about $100 per barrel, there is more wealth being generated in the province than in recent years and therefore the government should not be making cuts to programs or tabling a deficit budget. The budget is based on forecasting oil at $81.45 for 2010-11 and $89.40 for 2011-12.
“There are $1.6 billion in subsidies to the oil and gas sectors through the Oil and Gas incentive program, which is half of the deficit," said Gibson. “That industry does not need subsidies at this point, especially at the expense of cuts to programs."
Gibson felt this was not a big spending budget and there is no red ink being spilled; in fact, if population growth and inflation are added in, both education and health care spending are not increases at all, she said.
“Alberta is collecting $11 billion less in provincial taxes than the nearest province … they are not capturing the wealth generated in this province and redistributing it to Albertans," said Gibson. “Albertans are taking a hit in this budget when the economy is up and running already."
However, Shayne Saskiw, local candidate for the Wildrose Alliance, said the problem with the budget is not with taxation but expenditure.
“This is the second largest deficit in Alberta's history and the fourth year in a row that they ran a cash deficit shortfall," said Saskiw about the PC budget. “They have stated the operating deficit as $3.4 billion but we are indicating that it is actually $6.1 billion because there is a cash shortfall on infrastructure of $2.7 billion."
On Friday afternoon, the Wildrose Alliance released an alternative budget, proposing to erase the deficit in the 2011-12 year, while maintaining moderate spending increases in areas such as health care, education and children's services. The Wildrose budget would invest in infrastructure but extend the spending over a longer period of time, for a savings of $2.41 billion.
Thirdly, Saskiw says his party would eliminate government spending and “pet projects" such as Carbon Capture and Storage to reduce the deficit by another $180 million. Finally the Wildrose would reverse fee increases on vehicle registrations, veterans' license plates, and the registration of new charities and small businesses, saving taxpayers $85 million, he said.
