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Budget 2017: Spending increasing and revenue up, but debt grows
Published Thursday, March 16, 2017 3:25PM MDT
Last Updated Thursday, March 16, 2017 6:40PM MDT
The Alberta government laid out its financial plan for the coming year Thursday, with a budget that included an increase in infrastructure spending thanks to expected revenue growth.
Budget 2017 estimates $45 billion in revenue in 2017-18, with estimated expenses at $54.9 billion. The deficit has been pegged at $10.3 billion.
“We expect our economy to grow by 2.6 percent this year, the highest economic growth rate in Canada,” Finance Minister Joe Ceci said Thursday.
As of January 1, 2017, the province started collecting revenue from the carbon tax. The province is expected to generate just over $1 billion in the first year – but will pay back $175 million through a small business tax reduction, and $410 million in household rebates. After the reductions, it is expected to generate $453 million.
Over three years, the tax is expected to generate $3.9 billion, which will be about $1.8 billion after tax reductions and rebates.
Meanwhile, the province is taking some measures to reduce costs for Albertans, with a plan to reduce school fees by 25 percent, estimated to save families $54 million in the 2017-18 school year. For post-secondary, the province has frozen tuition fees for a third year.
“For Albertans carrying on to post-secondary, this will be the third year in a row we have frozen tuition, this is helping Albertans get the education, training and skills they need to get a job,” Ceci said.
“To help families, we are capping electricity prices to ensure stable and affordable power over the next four years.”
Ceci also touted the budget as it contains no new taxes.
“There are no new taxes in this budget, this budget is a budget that Albertans can look at and say there is no tax increase, we’re keeping things exactly the same going forward to make life more affordable, and we’re going to continue to have the backs of Albertans,” Ceci said.
Budget 2017 pegs the price of bitumen at $55 US a barrel, and it’s expected to bring in $2.5 billion in royalties in 2017-18. The province has forecast the price of oil to increase to $68 US a barrel in 2018-19.
The province estimates non-renewable resource revenue will be $3.9 billion in 2017-18, up from the previous year, which was forecast at $3.3 billion.
Its estimated $11.2 billion will come in from personal income tax, down from the year before ($11.5 billion), but corporate income tax is expected to go up to $3.9 billion, from $3.3 billion.
Nearly $8 billion is estimated to come from the federal government.
The province plans to borrow nearly $6 billion for capital projects, and borrow another $6.4 billion for the fiscal plan.
As revenue is expected to increase, spending is as well – up to $54.9 billion from $53.75 billion in the previous budget.
The province’s capital plan is for $4.7 billion, spent over four years, for maintenance and upgrades which include $2.1 billion for roads and bridges, $676 million for advanced education, $600 million for healthcare facilities and $473 million for schools.
In Edmonton, a total of $400 million has been budgeted for planning for a new hospital, but funding doesn’t kick in until 2018-19.
“The last time Edmonton had a new hospital was more than a generation ago, I think it was 1988,” Health Minister Sarah Hoffman said. “At that time the population was in the 500,000 range, now we’re much closer to one million.
“It is about time.”
A total of $65 million has been budgeted for upgrades to the Misericordia Hospital ER, with another $10 million for planning.
“For their submission they said that they wanted a multi-phased approach, the first phase making sure that emergency room is addressed,” Hoffman said. “That’s what we’re making sure is the number one priority, so we’re building that brand new emergency room on that site.”
As for the Royal Alexandra Hospital, the province has budgeted $155 million for a Child and Adolescent Mental Health building, with $10 million for planning. There is no funding set aside for upgrades.
Edmonton’s Norwood Long Term Care Facility will see $364 million. The Stollery Children’s Hospital will also see $53 million for a critical care program.
In Calgary, $1.2 billion has been budgeted for the Calgary Cancer Centre, and $17 million budgeted for the Foothills Medical Centre.
The province has planned for 200 school projects, both new schools and modernizations – at a total four year cost of $1.5 billion.
“We’re investing in capital right across the province, we’re a very young population and our population continues to grow, especially in suburban areas, Edmonton, Calgary, but other areas too,” Education Minister David Eggen said.
“When we’re building schools we have to look at growing population, but also schools that are in need of imminent problems with the buildings themselves, and replacement schools.”
In infrastructure, the province has budgeted $120 million for the Valley Line LRT in Edmonton.
Transportation Minister Brian Mason said the City had not formally applied for the extension on that line.
“There is $120 million for the Valley Line, but that’s the existing portion,” Mason said. “We’ve not yet received the formal request for the extension.
“I believe the City of Edmonton is still working on that and we’re certainly going to give that very careful consideration once we receive it.”
The province has also earmarked $2 million for the Edmonton Public Library’s Stanley A. Milner Library renovation.
The province is also planning on moving forward with plans to eliminate the at grade rail crossing at 50 Street.
A nearly $50 million affordable housing unit will be funded in the Londonderry neighbourhood of Edmonton. The 220 unit facility brings Edmonton closer to its goal of 1,000 new affordable housing units.
Meanwhile, the province has budgeted $97 million for the Red Deer Justice Centre – funding is over four years, but will start with $25 million for planning and design.
The province has also budgeted $100 million over four years for drinking water in Alberta’s Indigenous communities.
In Edmonton, the NAIT Centre for Applied Technology will receive $55 million, while the NorQuest College Expansion and Retrofit will receive $40 million. The University of Alberta Dentistry and Pharmacy department will receive $149 million over four years.
In Calgary, $262 million has been set aside for the University of Calgary’s MacKimmie Complex, with $8 million set aside for planning.
While a number of projects throughout the province are budgeted for, there are a number of others that didn’t make the cut.
Among those projects are the Aurora Project at Edmonton’s TELUS World of Science, redevelopment of Boyle Street Community Services, and a total of eight school projects in Edmonton, four for the Edmonton Catholic School District, and four for Edmonton Public.
Upgrades to the southwest leg of Anthony Henday Drive have gone unfunded, same with upgrades for the Calgary ring road.
An extension at Edmonton’s Winspear Centre has not been funded, same with upgrades to both Jubilee Auditoriums in Edmonton and Calgary.
Also in Calgary, eight school projects, four in the Calgary Roman Catholic Separate School District and four in the Calgary School District, were not funded.
In this budget, Alberta’s Heritage Fund will be at $15.7 billion.
While Budget 2017 has a deficit of $10.3 billion, the province’s debt is $45 billion.
The province said a balanced budget isn’t expected until 2023-24.