Alberta’s Finance Minister tabled Budget 2018 Thursday, outlining the province’s financial plans for the coming years, including a plan to balance the budget by 2023.
Minister Joe Ceci billed the budget as the next steps in the province’s continued recovery from the recession, saying it was “making sure this recovery is built to last and built for working Albertans.”
Alberta Budget 2018 forecast spending at $56.2 billion, with revenue of $47.9 billion. The forecast budget deficit is $8.8 billion.
Budget 2018 forecasts a $59 USD/barrel on bitumen – forecasting revenue of $1.8 billion.
The forecasted budget deficit is down from 2017 ($9.1 billion). Following years forecast incremental reductions in the deficit – which the province expects will finally reach a surplus of $700 million in the 2023-24 budget.
The budget does not add new taxes, or cut services – the province is depending on pipelines to help eventually balance it. The budget included no contingency plans if the Trans Mountain pipeline expansion project does not move ahead according to plan.
“What I can tell you is our path to balance is not solely predicated on [Trans Mountain],” Ceci said. “Our path to balance is predicated on a number of things, including controlling costs of government going forward.”
Capital spending in the budget was reduced from the previous year. In essence, there’s less money to spend over a longer period of time.
In 2017, $29.5 billion was budgeted over four years. In Budget 2018, the province has revised the number and set aside $26.6 billion over five years. To offset that difference, reductions were made to certain grants including the Alberta Community Resilience Program ($25 million annually) which helps communities with things like flood disaster recovery.
Alberta’s two largest cities will also have to get by with less funding from the Municipal Sustainability Initiative (MSI) for Edmonton and Calgary. It is being reduced by $152 million per year, $61 million for Edmonton and $91 million for Calgary in 2018.
The entire MSI program expires in the 2021-22 fiscal year. In his Budget Address, Finance Minister Joe Ceci said, “funding arrangements will be reviewed.”
Capital Funding is supporting LRT projects in Edmonton and Calgary. The province has committed $3 billion dollars over the next 10 years. On paper, $855 million has been committed over the next 5 years, cash stemming from revenue generated by Alberta’s Carbon Levy. Most of that money, the province said, will go towards funding Calgary’s Green Line.
The province outlined plans to build 20 new schools at a cost of $393 million – no details were released on the locations of the new schools; those details will be released later. The capital budget invests $2.2 billion over five years on school infrastructure.
The province said $4.6 billion was set aside for capital projects in health care over five years, with funding slated for a variety of projects including Edmonton’s new hospital, the Calgary Cancer Centre, the Norwood Long Term Care Facility, the Edmonton Clinical Laboratory Hub and plans for healthcare facilities in the Red Deer area.
A total of $59 million has also been set aside for medical instrument cleaning and sterilization units for the Red Deer Regional Hospital and Calgary’s Peter Lougheed Centre.
Ahead of the legalization of cannabis later this year, the province had an outline of potential revenue the province could collect.
The province said there is tax room of $1 per gram, or 10 per cent of the producer price – whichever is greater – that will be shared between federal and provincial governments. The province would receive 75 percent of that revenue, and could also collect additional taxes.
The Alberta Gaming and Liquor Commission will also be able to collect a markup on distribution and retail sales of cannabis.
The province believes it will be $26 million at the end of 2018, $80 million in 2019 – in the 2020-21 budget year, revenue from cannabis is expected to be $99 million.
Budget 2018 touted Alberta’s tax advantage over other provinces, as there is no sales tax, no health premium and no payroll tax – saying Albertans would pay at least $11.2 billion more in taxes and carbon charges if the province had the same taxes as others.
“We’re extending tax credits to help businesses grow and expand,” Ceci said. “We’re introducing new tax credits to encourage investment in our tech sector.”
The province has already announced Bill 2: Growth and Diversification Act – which includes the Interactive Digital Media Tax Credit. That credit covers 25 percent of eligible labour costs after April 1, 2018. The credit has a funding cap of $20 million per year – it’s estimated it will provide $13 million in 2018-19 and $16 million in 2019-20.
While the province’s plan focuses on reducing the budget deficit – the province’s debt is forecast at $54.2 billion in Budget 2018. The debt is not expected to drop any time soon.
“I think that’s what it will take to make sure that we don’t do without the important programs and services Albertans have come to rely on,” Ceci said.
When the province’s plan calls for a balanced budget, when asked, provincial officials said the debt is estimated to be $96 billion.
