EDMONTON – Alberta is predicting a $3.4 billion deficit for the upcoming year.
It will be the third consecutive deficit for a province that was once the envy of the country with its vast resource revenue and budget surpluses.
Provincial finance minister Lloyd Snelgrove said the deficit is a result of the government’s decision to go ahead with previous commitments to build hospitals, schools, roads and infrastructure programs.
“Albertans told us last year and the year before, they don’t want to go back into the pendulum days when we over spent and over cut,” Snelgrove said when he delivered the 2011-2012 budget Feb. 24.
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“We could have made cuts that some critics were calling for, cuts that would have been damaging to core programs or infrastructure plans, but that would be short sighted. We didn’t panic during the darkest days of the recession and we’re not going to panic now,” he told a pre-budget news conference.
One of the critics calling for cuts is Wildrose Alliance party leader Danielle Smith, who said the government should have stretched out its infrastructure spending over five years rather than three to help contain infrastructure spending.
“They’re practically vapourizing our savings accounts,” said Smith, who does not have a seat in the Alberta legislature.
“You can’t just keep on hoping that revenue increases are going to bail you out of this problem.”
The government is not making big spending cuts. Instead, spending will be $39 billion, a half percent increase over last year.
The government will cover the budget shortfall by drawing down the Sustainability Fund to $5.2 billion from $11 billion.
The decision to drain the province’s rainy day fund to pay for infrastructure projects and cover spending is worrying critics.
Liberal leader David Swann said the government didn’t make the tough choices needed to not continue spiraling into deeper debt.
“The Conservatives continue to act like they have an endless supply of Monopoly money,” said Swann, who has announced he will retire as provincial Liberal leader.
Alberta NDP leader Brian Mason was also concerned about the government’s use of the Sustainability Fund to offset the deficit.
“By draining the Sustainability Fund, they’ve managed to keep themselves together, but next year is going to be a very, very serious problem.”
Premier Ed Stelmach had initially planned to have Alberta back to a balanced budget by 2012, but that has been pushed back to 2013.
Snelgrove said it’s only becoming apparent now how big an impact the economic downturn had on the Alberta economy.
The province is only just recovering, he added. Revenue is expected to increase $1.6 billion to $35.6 billion in 2011-12.
Snelgrove said in past years, much of Alberta’s revenue came from oil and natural gas. Now, the government is counting on the royalties from the oilsands’ bitumen, expect ed to reach $7 billion in three years.
“Most of us knew the potential of the oilsands,” said Snelgrove.
Agriculture remained unscathed with a budget of slightly less than $1 billion.
Agriculture minister Jack Hayden said most of his department’s budget is tied into long-term programs with the federal government or long-term provincial government programs.
“Most of the programs have a fairly long life span,” said Hayden.
It’s the long-term nature of the agriculture programs that helped “safeguard all of the programs to producers,” he added.
Humphrey Banack, president of Wild Rose Agricultural Producers, said he was pleased by the lack of major cuts to agriculture.
“We are, as much as other producers in the province, concerned with a deficit budget.”
