EDMONTON — Alberta’s budget preserves health and education funding but takes a big stick to cities, civil servants and universities.
The first budget from the United Conservative government elected in the spring projects a deficit of $8.7 billion on $50 billion in revenue for 2019-20. Debt is projected to rise to $72 billion by next spring.
It sets to reduce overall program spending by 2.8 per cent over four years to balance the books by 2023, while delivering tax incentives and tax cuts to allow the private sector to grow an economy weighed down by sluggish oil and gas prices.
“It’s a good day for Alberta,” Finance Minister Travis Toews said prior to introducing the fiscal plan in the legislature Thursday.
“Our budget theme is getting Alberta back to work.”
The budget builds on the government’s flagship corporate tax cut that has already seen the rate drop to 11 per cent from 12 per cent. It’s to reach eight per cent by 2022.
The cut, along with expanded pipeline access expected from projects such as the Trans Mountain expansion, is the foundation of the government’s plan to improve the economy while minimizing service cuts.
But Toews said if financial conditions worsen outside the province’s control, the government will break out the scissors.
“We live in a world of great volatility,” he said. “This government is very prepared to take a look at our options and move in the direction of additional spending restraint.”
The budget fulfils an election promise by Premier Jason Kenney to take action on a string of multibillion-dollar deficits.
It forecasts shrinking deficits in the next two years before getting back to a surplus in 2023.
The budget was informed by the findings of a panel report chaired by former Saskatchewan finance minister Janice MacKinnon.
The report urged immediate reductions to prevent crippling debt payments down the road. It added that Alberta is paying the most per capita for public services while in most cases getting comparably poorer returns.
The budget keeps education and health funding stable, but the government says it will review programs to see if they are delivering value for money.
Municipalities are being asked to do more with less. An initiative to help towns and cities with capital funding is to reduced by $236 million over the next three years, equivalent to a nine per cent cut.
There is still to be $3 billion for rapid transit projects in Calgary and Edmonton, but most of that cash is to come after 2022. Rising federal contributions are expected to fill the gap. A new hospital in south Edmonton is to be delayed to 2030 from 2027.
Capital spending is being pegged at $24 billion over the next four years — about $1 billion less annually than the average over the last decade.
Universities and students face a new world. The advanced education operating budget is set at $5.1 billion, down five per cent from last year.
And, starting next year, the province plans to tie funding for universities to how many students graduate and to meeting the needs of emerging job markets.
The freeze on tuition is to be lifted but capped at seven per cent to a maximum 21 per cent over three years. Student loan interest rates are going up from prime to prime plus one percentage point.
The public sector is to be reduced by 7.7 per cent over the next four years, mainly through attrition. There’s also to be a reduction in management to staff ratios.
The austerity will hit some of Alberta’s neediest. Support spending remains stable for those with special needs, but programs such as the Assured Income for the Severely Handicapped will no longer be indexed to inflation.
The government has hiked the price of a carton of cigarettes by $5 to $55 and plans to implement a tax on vaping. The cost of a driver’s licence is to rise to $80 from $75.
Richard Truscott of the Canadian Federation of Independent Business said the budget delivers “tough medicine, but it’s certainly needed medicine.”
This report by The Canadian Press was first published Oct. 24, 2019.
Dean Bennett, The Canadian Press