Alberta Budget 2015: 5 things you need to know
Health-care levy, new tax brackets and fee increases part of this year's budget
It has been touted as a budget that will change the lives of Albertans.
After six years of consecutive deficits, the province is projecting to have a surplus of $248 million this year.
But Alberta is expected to return to a deficit budget in 2015 because oil prices have fallen roughly 50 per cent since last summer, causing a $7-billion revenue shortfall next year — which amounts to the entire education budget.
The province says Alberta spends about $1,300 more per capita than the national average. The government vows to reduce the revenue gap three ways: $1.9 billion reduction in spending, $1.5 billion in new revenue and $4 billion from the province's contingency fund.
But what does the budget actually mean for the average Albertan? To begin with, the province is planning to hike user fees and change Alberta's tax structure.
Health-care levy, fees and fines
A new health-care levy will be introduced July 1, 2015, for Albertans, but will be included on their personal income tax primarily through payroll deductions. It will be more progressive than the previous health-care premiums scrapped by former premier Ed Stelmach seven years ago, meaning those who make more will pay more. Employers will not be affected.
It is expected to generate $396 million in the 2015-16 budget year.
| Taxable Income | Health Care Contribution Levy Payable |
| $0-$50,000 | No health-care levy |
| $50,000 to $70,000 | (taxable income - $50,000) x 5% to a max of $200 |
| $70,000 to $90,000 | $200 + (taxable income - $70,000) x 5% to a max of $400 |
| $90,000 to $110,000 | $400+ (taxable Income - $90,000) x 15% to a max of $600 |
| $110,000 to $130,000 | $600+ (taxable income - $110,000) x 20% to a max of $800 |
| $130,000 and up | $800+ (taxable income - $130,000) x 25% to a max of $1,000 |
Starting Friday at 12:01 a.m., Alberta's fuel tax on gasoline and diesel will be raised four cents to $0.13 per litre. There will also be an immediate 10 per cent liquor markup and hike to tobacco tax.
- Bottle of wine: $0.16 increase
- Case of beer: $0.90 increase
- Carton of 200 cigarettes: Up $5 to $45
- Loose tobacco: Up to 33.75 cents per gram
The tax rate for insurance premiums is going up one percentage point in April 2016. It will be going up to three per cent for life, accident and sickness insurance, and to four per cent for any other insurance contract.
On average, there will be a 35 per cent increase in traffic offence fines. For example, speeding tickets currently cost $57-$351 but will increase to $78-$474 next year. Many other user fees — campgrounds or the cost of getting a marriage license, birth certificate or death certificate — will also see an increase.
Tax changes
There is no provincial sales tax proposed in this budget, and corporate taxes and oil royalties will remain unchanged because the province expects the current economic slump to last into 2016.
There will be changes to Alberta’s 10 per cent flat tax, but not for anyone who makes less than $100,000. Those with a taxable income of $100,000 to $250,000 will have increasing tax rates for the next three years.
The tax change is expected to generate $330 million in 2016-17, rising to $730 million in 2018-19.
| Taxable income | 2015 | 2016 | 2017 | 2018 | 2019 and later |
| $0-$100,000 | 10% | 10% | 10% | 10% | 10% |
| $100,000-$250,000 | 10% | 10.5% | 11% | 11.5% | 11.5% |
| $250,000 and up | 10% | 11% | 11.5% | 12% | 11.5% |
There is also a new Alberta Working Family Supplement to work in conjunction with Alberta Family Employment Tax Credit, which will also see a boost starting July 2016. It's for low-income families who are employed.
The Charitable Donations Tax Credit for amounts of more than $200 will also go back down to 12.75 per cent in 2016 from 21 per cent. It is expected to save the province $90 million a year.
Public sector wages
The premier focused much of his pre-budget rhetoric on public sector salaries, claiming wage increases from negotiated contracts will cost Alberta taxpayers $2.6 billion over three years.
The province says it spent half of its entire budget last year — or $22.5 billion — on public sector compensation, including teachers, nurses and doctors.
"The cost of Alberta's public services will be brought in-line with the national average over the next three to four years," states the budget.
Roughly 2,000 full-time equivalent positions are expected to be eliminated in 2015-2016, mostly through attrition, which will save the government an estimated $200 million.
Out of those, roughly 244 positions are expected to affect the education department. The cuts are not expected to impact class-room teachers, but could affect "non-certificated staff."
Roughly 1,700 jobs will be eliminated at Alberta Health Services but the government is saying no front-line job cuts will happen. The province says the majority of that will come from not filling vacant positions, as there is high turnover in the organization. The government is also freezing management salaries at Alberta Health Services.
Infrastructure funding
Overall the government plans to reduce spending, but will be borrowing money to complete capital projects in the province. Below is a list of the funding for some big ticket items:
Hospital funding over five years will add up to $3.4 billion:
- $926 million for projects in Calgary and Edmonton.
- $847 million to continue projects in Edson, Grande Prairie, High Prairie, Lethbridge, Medicine Hat and Red Deer.
- $200 million for long-term care beds and other critical health-care projects.
New schools and modernization projects will get roughly $3.9 billion over the next five years.
- Phase 2: 107 builds in 2016, 10 in 2017 and two in 2018.
- Phase 3: 12 builds in 2016, 66 in 2017 and five in 2018.
- There is also $80 million set aside for 160 modular classrooms in 2015-16.
But there is no additional money for teacher wages, so one question many are asking is how they will be staffed. School boards will also not be funded for projected enrolment growth of 1.9 per cent next year. However, the province has pledged $74 million over three years to improve educational outcomes for First Nation students.
Ring road funding is expected to be stretched out over more years, and the Calgary project will be reduced five per cent overall with lower construction costs anticipated. It will delay the west portion of the southwest ring road from 2017 to 2020-21. The government still hopes to start construction on the southwest portion this year, the only hurdle is the land transfer with Tsuu T'ina Nation, which could be finalized this summer. The total funding for rings roads in Calgary and Edmonton is estimated to cost $2.9 billion over the next five years.
Highway 63 has been designated $353 million in funding over the next five years with the bulk coming in 2015-16. The government says toll roads are an option being considered, but there is nothing in the budget at this time.
Heritage Trust Fund
Beginning in 2019-20, for the following five years, the government plans to only use 50 per cent of oil revenues for budgeting purposes.
The other half will be dedicated to a "contingency account" that will go towards repaying debt and the Alberta Heritage Savings Trust Fund.
"At today's oil prices, if government took no action, we would burn through our savings from the contingency fund in the first year, and then blow through the Heritage Fund over the next two years," said Alberta Finance Minister Robin Campbell in his speech.