Lost amid all the focus on Tuesday’s federal budget, Alberta brought down its own budget yesterday — holding the province up as a model of fiscal responsibility.

“Blessed with persistently strong energy prices, Alberta aims to balance its books for the eleventh consecutive year in FY04/05 following a blow-out $3.3 billion flood of black ink in FY03/04,” reports BMO Nesbitt Burns.

“Even with exceptionally conservative revenue assumptions, another raft of tax cuts and a chunky increase in operating spending, Alberta still expects a surplus of $303 million in the coming year.” But Nesbitt sees the surplus coming in at more than $2 billion.

It notes that the budget is based on the assumption that resource revenues will plunge 35.8% in the coming year. “The projections appear excessively cautious, as has been the case for many recent budgets in Alberta.” Nevertheless, it says the province’s GDP forecast of 3.6% for this year looks reasonable.

Despite the forecast that revenues will plunge, Alberta still had room to boost spending on key areas such as education (+5.7%), health (+8.4%), along with a few other things. And, it cut taxes. Corporate income taxes are sliding down by 1 percentage point to 11.5% at the start of April, and the small business rate is to be lowered by a similar amount to 3%. Personal tax deductions will be indexed for inflation and school property taxes will be cut 2.3%.

Also, Alberta’s stock of debt is projected to drop to under $3 billion by the end of FY04/05. The province is close to eliminating its debt entirely. “Alberta’s assets already exceed liabilities, but now even its gross debt is vanishing,” says CIBC World Markets Inc. “Accumulated debt had dwindled to only $3.7 billion at the close of 2003/04, and another $1 billion is to be paid off in the upcoming two years, even under conservative energy price assumptions.”

“Overall, Alberta’s fiscal position is incredibly strong, and this budget simply reinforces that picture,” concludes Nesbitt.