Alberta records 1st deficit in 15 years

For the first time in 15 years, Alberta has officially recorded a deficit, with a shortfall of $852 million for the fiscal year ended March 31.

Treasury Board President Lloyd Snelgrove has already said government job cuts and tax hikes are a possibility as he prepares to trim $2 billion from the provincial budget starting next year.

"As Albertans we've got to have the opportunity to talk about everything, but what we're concerned with at Treasury Board...  is the spending," Snelgrove said.

The province has nearly $10 billion in its Sustainability Fund, designed to top up spending when resource revenues fall off sharply. The government plans to dip into that fund to cover the $852-million shortfall announced Tuesday.

Early in the 2008-09 fiscal year, the province was predicting an $8.5-billion surplus, but those projections soured as oil prices tumbled from record highs last summer and natural gas prices fell sharply.

Spending is a problem, but one that the Tories have created, Alberta Liberal Leader David Swann said.

"Surely a colossal mismanagement of Alberta's resources, a travesty of planning for our future," Swann said of the government's fiscal record.

Alberta is still too reliant on money from the oil and gas sector, and that has danger written all over it, NDP MLA Rachel Notley said.

"This Tory government is taking Albertans on a roller-coaster ride that they insisted on building. The mismanagement here is frankly awe-inspiring," she said.

The opposition parties are encouraging Snelgrove and Premier Ed Stelmach's cabinet to rein in spending, but only if it isn't done on the backs of seniors, people who need hip and knee replacement surgery, and children who are already in large classrooms.

Fifteen years of surplus budgets had put Alberta in the enviable position of being debt-free. But now, rocked by the double whammy of a recession and falling energy prices, the deficits are piling up.

The province's Heritage Savings Trust Fund, which was designed to help diversify the Alberta economy, took a $3-billion hit when equity markets crashed, leaving its value at $14 billion at the end of March. The fund is beginning to recover some of its losses as financial markets show signs of recovery.