Alberta government on track for balanced budget after turbulent year
$62.6B revenue expected next year; province predicting $511M surplus
The Alberta government is pledging to balance its budget for the first time in eight years — a feat made possible by buoyant oil and gas prices.
Finance Minister Travis Toews introduced the 2022-23 budget in the legislature on Thursday with a commitment to balance the budget for the next three years. The government is also expecting to run a surplus in each of those years.
Expenses are pegged at around $62.1 billion next year, leaving Alberta on track for a $511-million surplus in 2022-23.
As the United Conservative Party government did before the pandemic, finance officials are banking on rising employment rates and higher salaries to generate more personal and corporate income taxes flowing into the province's coffers.
They hope that these, in combination with higher revenues expected from liquor, gaming and cannabis, will help reduce Alberta's dependency on oil and gas revenues.
"There's no doubt that we're relying on the energy industry," Toews said during an embargoed news conference earlier Thursday.
"It's a big part of the province's economy. But as we continue to see a more diversified economy, we will begin to see more stability in other revenue streams."
Bitumen royalties make up about a sixth of Alberta's anticipated $62.6-billion revenue expected next year, which runs from April 1, 2022 to March 31, 2023.
The assumptions rely on an average West Texas Intermediate oil price of $70 per barrel next year.
The proposed spending is 4.3 per cent less than the current year, which saw the government funnel billions of dollars to the COVID-19 pandemic response and disaster relief for drought-stricken farmers.
The government signalled that help could be coming for consumers left gape-mouthed by ballooning utility bills. Such rebates would only kick in when the cost of natural gas rises above $6.50 per gigajoule.
The price in Alberta this month has been around $4.60/GJ.
Although budget documents say the rebate program wouldn't kick in until October 2022, Toews said Thursday that if prices rise above that $6.50 threshold before then, the government would begin issuing rebates to most consumers.
The exact details of how the program will work have not been released.
The 2022 budget also continues a freeze on tax brackets, introduced in 2019 by the UCP government. It prevents tax brackets from rising with inflation, which leaves some people paying higher tax rates, even while their earnings give them no more buying power.
The freeze was supposed to be temporary. Toews said Thursday his government would review it after the Alberta government finishes a fiscal year in the black, which hasn't happened yet.
Several critics said they were disappointed by the continuing bracket creep, which they say costs citizens more with every year it continues.
Toews said the best antidote to rising prices are more, better-paying jobs.
He pointed to a growing labour shortage in the province, and a mismatch between unemployed workers' skills and the training employers are seeking.
To address that, the government will invest $600 million during the next three years in a new set of programs called Alberta at Work.
It includes the creation of 7,000 more post-secondary seats in programs related to technology, agriculture, financial services and aviation — sectors the government hopes will grow.
The funding will also help adults retrain for new careers and provide more public information on the labour market.
Few details on surgical plans, intensive care beds
Although the premier had pledged historic investments in health care, the budget came with a planned 2.7 per cent increase in health spending compared to last year's allotment, or about $600 million more.
The former NDP government increased health spending by three per cent per year during its last two fiscal years in office, which were 2017-18 and 2018-19.
The province has also set aside an additional $750 million to help tackle a backlog of surgeries delayed by the COVID-19 pandemic and respond to any future waves.
An Alberta Health spokesperson said the government had not yet decided how many additional surgeries will be funded, and what proportion of them would happen in private surgical facilities.
The government wants to double the number of surgeries happening in private surgical centres to free up more public hospital beds.
And although the government has allocated $100 million a year for three years to train and recruit more health-care workers, particularly for intensive care units, it had no details Thursday on how many more intensive care beds it wishes to fund.
The budget does predict that Alberta Health Services will grow by about 850 full-time employees during the next year. It currently has around 103,000 workers.
LISTEN: A special Budget 2022 episode of The Loop
Opposition leader Rachel Notley said despite the unexpected influx of oil cash, the budget doesn't do enough to address Albertans' rising costs of living.
She said she was "shocked" to see a consumer natural gas rebate wouldn't take effect until next fall — and possibly never, if prices stay below the threshold.
And although the books may look balanced, she said it comes at a cost.
"This budget is not balanced if people can't get the healthcare they need, when they need it," she said.
"If emergency rooms across rural Alberta are closing on a scheduled basis, if we can't get doctors, if we're almost 1,000 teachers short in our classrooms, if families can't pay their utility bills at the end of the month because they've gone up threefold – that's not a balanced budget. That's a shell game, and it's one that hurts Albertans."
Independent MLA Drew Barnes, who represents Cypress-Medicine Hat in southern Alberta, said the government should have found more efficiencies to drive down costs and begin tackling the provincial debt.
But Kevin Lacey, Alberta director of the Canadian Taxpayers' Federation, said he was pleased to see the government take steps to curtail spending.
"It means we're beginning to pay off the debt, and that means we'll have less interest costs, then we can put money to thinks like heath care, education, better roads, or lower taxes," Lacey said in the legislature after the budget was presented.
Crude-by-rail contracts to be fully sold off
The province also said Thursday it intends to be completely free of the former NDP government's crude-by-rail commitments by the end of next month.
Flustered by a surplus of oil and no pipeline capacity, the NDP government spent billions leasing train car space to ship a glut of oil out of the province by rail.
The UCP has claimed it was a poor investment, and has spent the past three years trying to sell off the contracts. Budget documents say the total loss to taxpayers was about $2.1 billion.
The budget also includes updated third-quarter projections for the current fiscal year. It says Alberta is on track to post a $3.2-billion deficit, which is far smaller than the $18-billion shortfall originally expected.
The government anticipates spending $3.5 billion this year on the COVID-19 response and $3.1 billion on disaster response, which are both much higher than anticipated.
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