The Provincial government’s third quarter results were released on February 28th. Our improving economy generated more revenue. But optimism that our government would learn how to contain costs was misplaced.
Yes, revenue is up by $2.0 billion (hurrah!) but so are expenses by $1.0 billion. (Damn!)
On the revenue side we brought in $46.9 billion. The Heritage Savings Trust Fund and other investments generated $866 million more than anticipated. Resource revenue was higher too (in spite of poor bitumen prices) – up $780 million. A change in calculating the electricity balancing pool liability saved $771 million (…. Hmmm may be suspicious math). But revenue for personal and corporate income tax was down $388 million and so were “sin” taxes for cigarettes, gaming and liquor.
Sadly, expenses ($55.9 billion) were higher than projected. Government’s operating budget saw increased welfare spending ($264 million) and health spending ($56 million). Government also spent an extra $260 million on wildfires and agriculture assistance. The climate plan under spent by $291 million (mostly because some costs were transferred to an earlier year for accounting purposes … more voodoo math).
The infrastructure capital program under spent on schools and roads but transferred municipal and green transportation funding faster than anticipated. So, the capital plan will come in about even compared to budget.
All in, this year’s deficit is now forecast at $9.1 billion.
As the dust settles, some conclusions appear. While the economy is improving and generating more revenue; government’s base budget is increasing mostly because to increase program spending. Government’s hope to reduce the health budget by “bending the curve” failed this year.
After a caucus retreat this fall, Premier Notley said the budget for next year would contain “compassionate reductions”. Severely Normal Albertans can rightfully be skeptical based on the track record in this year’s budget. One would hope that some compassion can be found for the future taxpayer who will be carrying billions of dollars of debt.