There were stains of angry crimson splashed across last week’s provincial budget document, but it wasn’t as though Albertans hadn’t already been preparing for a rough passage.
Still, many Albertans had been bracing for big cuts across the board, not a buffet of borrowed billions being funneled towards infrastructure spending on roads, hospitals and schools.
Unavoidable, claims the PC government of Premier Alison Redford — Alberta’s fast-growing population and an escalating price differential for the province’s oil have mandated a focus on infrastructure spending despite falling royalty revenues. Coupled with no new tax increases, the final tally rings in at $6.3 billion in red ink, factoring in no new increases in day-to-day spending.
Blaming the province’s fiscal woes solely on a “bitumen bubble” is a whole lot of hogwash, says Cardston-Taber-Warner MLA Gary Bikman, who represents the Wildrose Alliance Party.
“The day to day spending to me is out of line, because they didn’t really cut in areas where there’s bloat, where there’s room to cut. It’s kind of hard to tell with their creative accounting. They claim it’s because conditions have changed — the so-called ‘bitumen bubble’, that’s a word they use that I don’t — it’s just a price differential. It’s always existed, and was in fact very similar in April of last year, to what it has been over the past few months. There should have been no surprise. It’s very disappointing — I expected more from the government.”
On the operating side, total revenues for 2013-2014 are an estimated $38.6 billion, $5.4 billion lower than the 2012 budget forecast, which also failed to predict a growing price differential for Alberta’s bitumen exports has led to a $6.2 billion drop in expected revenue.
Operating expense is forecasted at $36.4 billion, still well below expected growth in the population plus inflation rate of 4.3 per cent.
An operational deficit of $451 million — something only rarely witnessed by Albertans — is expected for 2013-2014, followed by forecasted surpluses of $1.5 billion and $3.3 billion for 2014-2015 and 2015-2016.
This fiscal year’s deficit is being offset by an injection from the rebranded Sustainability Fund, now dubbed the Contingency Account. Once hosting $17 billion in savings four years ago, it will have dwindled to $691 million by next spring.
A string of broken election promises by the Redford PCs has left constituents feeling betrayed, according to Bikman.
“I think Albertans were hoping that somehow Redford would keep her promises and control the spending, and not provide any kind of operational deficit, or an overall spending deficit. So I think generally they’re pretty disappointed.”
"I think the comments that we’re seeing in the media, from the people on the street so to speak, indicate that they feel let down and betrayed. This wasn’t the budget that they ran on in April. Their election campaign was not based upon these types of deficits.”
On the capital side, the province is planning to invest $15 billion into infrastructure projects over the next four years, including $5.2 billion in 2013-2014. Some $4.3 billion of those dollars will be funded through direct borrowing.
Municipalities were one area which went relatively unscathed by a round of belt-tightening in the ministries.
“It appears that overall, they’re going to maintain funding levels for the municipalities at the same level that they’ve been at. We’re encouraged by that,” said Bikman. “(But) I don’t think it’s sufficient, because I know that they’re going to find other ways to download expenses in areas that they claim to have cut, they’re going to download that onto the backs of the municipalities and the taxpayers, and will probably end up forcing municipalities to raise their own tax levies.”
In agriculture, Bikman referenced the elimination of a farm fuel subsidy as of profound concern to producers throughout the riding.
“With regard to farms and agriculture, we know that their budget has been cut dramatically. I’m already getting emails from concerned farmers about the  $0.06 increase in the cost of their fuel. And there’s also been more money taken away from programs that farmers have relied on over the years.”
On the savings front, Finance Minister Jack Horner announced legislation that will mandate a percentage of non-renewable resource revenue go to savings, while debt servicing will not be more than three per cent of operating spending.
Pointing to his own party’s shadow budget, Bikman advocated an increased focus on fiscal conservatism in the face of staggering shortfalls.
“We proposed our alternative budget. We have proposed no borrowing, and budget surpluses, and specific savings amounts to wean us off of operating our year over year budget based upon oil prices. And it includes, of course, eliminating waste and reducing corporate welfare. There are a number of areas where the government subsidizes large corporations. I had the opportunity to talk to some of executives of Shell Oil recently — and they’re the recipient of almost a $1 billion in government subsidies for carbon capture — and I specifically said how can a company that has more money than God justify receiving subsidies from Alberta taxpayers?”