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Horner visits locals to discuss Alberta budget

Posted on October 16, 2013 by Taber Times

On a cross-province tour hearing the priorities of Albertans with regard to the upcoming 2014 provincial budget, Finance Minister Doug Horner stopped in Taber last week for a budget consultation with local citizens.

Similar consultations last year yielded results that were factored into the 2013 provincial budget, according to Horner, who was looking to get much the same from citizens across the province this October.

“One of the things that came out of that is you’re spending too much, you’ve got to live within your means, you’ve got to get back to where your operating is less than your revenue coming in,” said Horner, speaking to a small crowd at the Heritage Inn on Thursday.

“The other thing we heard loud and clear is you’re not saving enough. You have all these royalty revenues coming through, and you guys aren’t putting enough money away in the Heritage Savings Trust Fund. So when we passed the budget this year, we also passed legislated savings that has to be done. Regardless of what’s happening in the province, we have to take an amount off the top and send it to the Heritage Savings Trust Fund.”

In the 2013 budget, the province saw $37.6 billion in revenue, broken down into 51 per cent from taxes, 19 per cent from resources, and further 30 per cent from various other sources. Expenses topped out $38 billion, broken down into 45 per cent for health, 16 per cent for education, 11 per cent for human services, seven per cent for enterprise and advanced education, and a further 20 per cent for other areas.

Horner pointed to legislated savings and a zero per cent increase in operating expense in 2013 is a first step in bringing the province’s spending under control and increasing savings portfolios.

“When you take the projections that have been done, and you look at where things are going to go, you see by about 2017 we’re going to be up around $29 billion. You’ve probably heard from guys that we’ve blew through our savings, we have no savings left, we’re all in a total mess. That’s a pile of bunk — today we have about $20 billion in cash. We’ve got about $14.8 billion in the Heritage Savings Trust Fund, and we’ve got about $3 billion in endowments. Then you’ve got the Contingency Account, which is really your rainy day fund, which will go up and down.”

Seeking input for 2014 for an operational plan, a capital plan, and a savings plan to make up the new budget, Horner also spoke about a looming population bubble, which is pressuring the province financially on multiple fronts.

“The other thing that people said to us is, you need to continue to build infrastructure. In southern Alberta we’re talking about flood mitigation, last year we’re talking about on-stream storage. We knew we had to build infrastructure, whether you’re talking about schools, roads or hospitals. We passed four million people in our province in July. If you had said to me 10 years ago when I first got elected that we were going to be a province of four million people, I’d have said you’re smoking something. When you look at our population growth right now, if we were to continue on the kind of trend we’re on today, that means that by the time my grandson graduates — he’s three now — we’ll have seven million people in the province. Can you imagine that? That’s three more Calgarys. That’s a lot of roads, that’s a lot of hospitals, that’s a lot of schools. We’re already feeling the pressure there.”

Provincial debt can often be viewed as a matter of perspective when weighing financial pressures levelled against the government, according to Horner.

“People say we’re going back into debt. We’ve been in debt since the province started. What we’re not doing is borrowing for our operating. That is against the law. That’s what Ralph (Klein) paid off, was the accumulated debt from the 1980s. What we are doing is if your school is going to be there for 40 years, we might amortize it out over 20. So we’re going to the capital markets, getting the money that we need to build infrastructure, setting aside before we even come up with our operating revenue, setting aside the debt servicing costs for whatever debt we have on the books, before we set up our operating account. The province has a borrowing limit, which is three per cent of whatever our operating revenue is. The reason we did that is because it makes it interest rate sensitive. If interest rates start to rise, our debt servicing costs are going to rise.”

What Horner is hearing from Albertans will factor prominently into provincial budget considerations in 2014, added Horner.

“What Albertans told us last year in our consultations definitely ended up in our budget I delivered in March 2013. What we’re doing this time around is we’re saying you’ve got all this savings, we’re living within our means, we’ve got really strong population growth, factored with a really strong economy. When you’ve got that kind of population growth, it means people are coming here because of opportunity.”

Unforeseen expenses due to flood relief and recovery will have a significant impact on the 2014 budget.  

“This year, we’ve projected a $400 million deficit in our operating. I can tell you right now, we’re probably not going to be there. If we hadn’t had the flood, we’d be in surplus, but because we had the flood, I am going to have to take a fairly substantial hit this fall, as is the federal government.”

Individuals looking to share their priorities for the 2014 provincial budget can do so through the Alberta.ca website and providing their feedback online. “We want to know what your priorities are now, talk about why you’re choosing those priorities, and then where should we increase funding, and where should we decrease funding,” said Horner.

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