The severity of Alberta’s fiscal problems hit home with many Albertans this week as Premier Prentice announced that the upcoming provincial budget will include an across-the-board five per cent spending cut.
Alberta Premier Jim Prentice has warned Albertans that the current fiscal year’s projected surplus has turned into at least a $500 million deficit and that next year’s budget will sink deeper into red-ink territory.
After governments abandon fiscal prudence, they will soon search for any and all ways to tax people more. This is the reality playing out in Alberta where Premier Jim Prentice has floated multiple tax increase trial balloons.
With oil prices plunging and provincial resource revenues expected to drop, Alberta’s red ink will rise. In response, Premier Jim Prentice has floated the notion of a provincial sales tax and/or hikes in other taxes.
Forty-one billion dollars. That’s the extra amount, over and above what was needed to keep pace with population growth and inflation between 2006 and 2013, this to fund Alberta government program spending in those years.
Alberta Premier Jim Prentice is in the midst of formulating his first budget and the fiscal path of the province while watching oil prices continue to decline.
If you listen to Alberta Finance Minister Doug Horner, the province's public finances are under control. The government's budget imposes no new taxes, spending growth has been moderated, and Alberta is running an operational budget surplus after successive years of budgetary deficits.
When apologists for the provincial government's new borrowing binge defend it on the grounds that private sector companies borrow money for capital expenses so why not have the Alberta government do the same? their defence invariably contains a significant and faulty assumption: that political behaviour is the same as that of private companies.
As Albertans approach another provincial budget, the usual fables about Alberta's finances often crop up. To inoculate ourselves in advance, let's ponder two myths.
Myth Number One: Alberta's wealth is a result of luck.
This tall tale assumes that the existence of natural resources automatically results in wealth creation, jobs, and a higher standard of living. That's hardly the case. Plenty of jurisdictions have little in the way of natural resources but prosper, while others have plentiful natural resources yet flounder.
For those who dont normally read budget documents, heres what the Alberta government just did in its 2013 budget: they abandoned the sensible budget and financial framework that former Progressive Conservative Finance Minister Jim Dinning introduced in 1993.