Bedroom Slippers

A couple of weeks ago the Alberta Finance Minister bought new cowboy boots to keep up the tradition of new shoes on budget day.  But he could have purchased bedroom slippers for the occasion!  The budget puts much of government on a holding pattern for the year. Except for aggressive reductions to post-secondary education and a push to reduce public sector wages.  

The UCP hit the snooze button on thoughts about addressing revenue problems.  And only cosmetic efforts are made to stabilize and broaden the economic base.

Table Courtesy Trevor Tombe University of Calgary

The only real priority is the pandemic.

The Alberta Economic Powerhouse Struggles

So, by the numbers:

REVENUE

Personal income taxes – Revenue will increase by $700 million on the strength of rebounding employment.

Corporate income taxes – Revenue will fall by $300 million mostly due to lower tax rates. 

Federal transfers – Help from the feds is forecast at $10.2 billion (about 23% of all revenue.) 

New revenue – No new sources are planned. And the forecast for revenue from investments is lower by $200 million. 

EXPENSES

Health Care – The overall budget is increased by $900 million along with a COVID contingency fund of $1.3 billion. But the budget for staffing has decreased by $600 million, meanwhile the government’s business plan proposes to add 3,000 staff. So, the arithmetic about the salary rollbacks and increased staffing levels is a tough circle to square. 

Post-secondary Education – The post-secondary system is the poster child for government austerity with this year’s reduction of 5.4% piled on top of two previous budget cuts.  Grants to institutions were chopped by $130 million. The University of Alberta was hardest hit, and Calgary didn’t fare much better.  Institutions are expected to increase the revenue they raise from tuition to cover half of their expenses.

Reducing Post-Secondary Education

Boondoggles – The cost of UCP boondoggles rose spectacularly with the cancellation of Keystone XL pipeline which leaves the taxpayers holding the bag for $1.3 billion in expenses.  In a fit of ideological pique, the UCP canceled a contract to buy rail cars to haul bitumen to market.  This year the loss is posted at $1.0 billion to go along with the $1.3 billion from previous years.  The final costs are shrouded in mystery, but it might be that only 40% of the rail car contract sell-off fiasco is complete. 

Staff cuts – The public service will see job cuts of about 1,400 mainly by attrition. But there are ugly cuts in the post-secondary system.

There is no long-term plan to revive the economy beyond a hope of better oil prices and minor efforts to diversify the economic base.  Severely normal Albertans will find that the UCP’s plan to clobber post-secondary budgets will bake in long term damage to expanding a knowledge intensive economy via a highly skilled workforce.  

And the Finance Minister continues to steadfastly stare at his slippers when it comes to generating revenue to fill the hole in his budget.