Alberta's financial state improves, but could turn
Published Wednesday, August 17, 2011 5:27PM MDT
The provincial finance minister released the province's first quarter fiscal update Wednesday, and the province is crediting higher oil prices and land lease sales to improving the bottom line.
The deficit for 2011-2012 is now forecast at $1.3 billion, which is down $2.1 billion from the budget, and provincial revenue is forecast to be $38.3 billion, which is up $2.7 million from the budget.
The Heritage Savings Trust Fund mostly stayed the same in the first quarter, falling only slightly to $15.1 billion.
Provincial expenses are now forecast to be $39.6 billion, showing an increase of $650 million from the budget – Minister Lloyd Snelgrove said that was caused by disaster and emergency recovery, such as the wildfires in Slave Lake.
One item that won't see more money is the Municipal Sustainability Initiative, or M.S.I.
The fund had been pitched by the premier to help pay for the province's portion of the cost for a new downtown arena. The premier said Wednesday the fund would not see an increase.
"There aren't any discussions in terms of increasing [the M.S.I. fund]," Stelmach said.
"We keep hearing this provincial M.S.I. funding is coming," City Councillor David Loken said Wednesday. "I would hope it's coming sooner than later.
"I know a number of us would like to get this project going."
Albertans are warned the numbers released could change drastically, as the update was prepared before financial instability in Europe, the U.S. debt crisis and the stock market hit the headlines.
Critics were quick to point out the over-all positive tone in the quarter update, given the current economic climate.
"Mr. Snelgrove has put election spin on numbers that are now obsolete," NDP leader Brian Mason said.
The finance minister mentioned the current instability could affect the province's bottom line.
"The sorts of challenges we are seeing in the U.S. and abroad can and will have an effect on our revenue," Minister Lloyd Snelgrove said, addressing the media Wednesday. "We need to keep that in mind as we prepare for the future.
"Fluctuating oil prices and exchange rates, lower natural gas prices and a recent tumble in the stock market are all cause for concern."
It could turn into a billion dollar concern, or more.
Much of the oil revenue forecasts are based on oil prices at about $97 per barrel, current oil prices are at about $87 per barrel.
The difference could cost the province about $1.4 billion in revenue.
With files from Scott Roberts