Alberta’s government says that volatile financial markets and global economic uncertainty are dampening its fiscal position, although it is now forecasting a narrower deficit.
The province is now forecasting revenues of $36.8 billion, up $1.2 billion from budget, primarily due to increasing land lease sales revenue, which is expected to be the highest in Alberta’s history. Corporate income tax revenue is also forecast to be higher than at budget, but these increases are somewhat offset by decreases in forecast investment revenue, personal income tax, royalties and a higher exchange rate.
Expenses are also forecast higher than in the budget at $39.9 billion, up $860 million, mainly due to spending on disaster and emergency assistance, capital grants for schools and housing and increased funding for education. As a result, its deficit forecast is reduced to $3.1 billion, down $341 million from budget.
“Despite the volatility in Europe and the U.S., Alberta remains in an enviable economic position,” said the province’s finance minister, Ron Liepert. “Our decisions in the past to eliminate the debt and build a short-term savings account are paying off today — we are keeping taxes low and spending on services that Albertans have told us are their priority. That said, there will be tough choices ahead as we need to address the growing costs of core services like health care and education with the need to balance the budget and save for the future.”
The province’s deficit will be offset by its Sustainability Fund, which holds Alberta’s short-term savings built up from past surpluses. Additionally, the province said that the Alberta Heritage Savings Trust Fund’s investment income is forecast at $472 million for the fiscal year, $578 million lower than estimated in the budget, due to weakened global financial markets.