EDMONTON — Faced with plunging oil prices and decreasing revenue, the Alberta government is spending money on infrastructure projects it says will act as a “shock absorber” for the economy.
Alberta finance minister Joe Ceci said instead of scaling back spending, the province’s $49.9 billion 2015-2016 budget will have even more debt and the largest deficit since 1987.
“In these challenging times, we want to keep front line services,” Ceci said during a news conference before the budget address.
“We don’t want to fire thousands of nurses and teachers, so we are going to appropriately fund front line services.”
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Total revenue is expected to be $43.8 billion in 2015-16, a decline of $5.7 billion, or 11 percent, from 2014-2015.
The province plans to spend $49.9 billion, including $34 billion in infrastructure building projects.
The NDP government will be forced to borrow to cover next year’s operating costs because of a dramatic drop in oil revenue.
Alberta Wildrose leader Brian Jean said the spending would send Albertans to the poor house.
“Every Albertan will be poorer because of this budget,” said Jean, who believes the government should have cut spending and developed more initiatives to create jobs.
“They have not taken any steps to protect Alberta jobs,” said Jean.
“There are hard times ahead.”
Faced with declining revenue, Ceci said the government must stimulate the economy through spending to help keep the province’s economy from collapsing.
“I think Albertans will continue to be proud we are building the province, that will take us far beyond this recession and lift us back to the good times,” he said.
“We think we have Albertans’ best interests at heart. We are not going to fire thousands of peoples to assuage some people in other parties.… We have a solid plan back to balance and we are going to invest in this province in capital development that will put Albertans back to work and help us ease this recession and lift us back to better times.”
Al Kemmere, president of the Alberta Association of Municipal Districts and Counties, said he is pleased to see the core support maintained and enhanced in grants and infrastructure projects for rural Alberta.
“The province is in a situation where they have a massive deficit, No matter who was in government they were going to have to deal with the reality of the deficit.”
Money for bridges, resource roads and community airports has been allocated in the budget for future years.
“While that money is not going to be accessible for another two budget cycles, it is good to see there is money in that program down the road.”
Kemmere said while no one wants to see the province build up a massive debt, he doesn’t feel people are willing to give up services.
The government is projecting a $6.1 billion deficit in 2015-16, which will drop to $5.4 billion in 2016-17. It intends to balance the budget in 2019-20.
Tobacco taxes will increase $5 a carton to $50 effective midnight. As well, liquor prices will increase five percent, and the mark-up structure will change to promote made-in Alberta products.
Locomotive fuel taxes will in-crease four cents to 5.5 cents per litre, effective Nov. 1.
The Insurance Premium tax will increase one percent.
The new taxes are expected to generate $1.5 billion in the 2015-16 tax year and $2.3 billion in the following two years.
Ceci said the budget is designed to focus on the NDP’s three priority areas: stabilize the public serve, balance the budget and create more jobs.
David Dodge, the former governor of the Bank of Canada who was hired to help the government through its first budget, said it is not unusual for provinces to borrow to fund operating, especially when revenues decline.
It turns out to be very usual at a point in time when the economy changes dramatically,” he said.
