The government of Alberta had a $1 billion surplus through the first half the year, but expects to finish the year right around the break-even mark as the full cost of the spring floods impacts the province’s finances.
Alberta’s finance ministry said Tuesday that the government’s operational revenue for the first half of the year was $20.3 billion, which is $1.4 billion higher than expected, primarily due to higher energy prices and increased investment income. Operational expenses were $19.3 billion, up by $247 million from prior estimates due to increased disaster spending in the wake of the floods it suffered; which was nevertheless offset by an overall drop in expenses mainly due to delayed health grants.
Overall, there was a $1.1 billion operational surplus after the second quarter. By the end of the fiscal year however, it’s projecting the final balance will range from a surplus of $250 million to a deficit of $250 million. Indeed, it notes that spending on flood recovery has only begun to impact the province’s bottom line; and, that by September 30, $351 million had been spent on flood assistance efforts.
“We are only now starting to see the costs of the flooding show up on our bottom line. In addition, the bitumen bubble is back from its holiday, highlighting the need to remain focused on building new markets and fiscal prudence,” said Doug Horner, president of Treasury Board and Minister of Finance.
Additionally, it reports that real GDP is now expected to expand by 3.3% in calendar 2013, up from the first quarter forecast. The forecast for economic growth in 2014 has also been revised upwards to 3.5%, it says. Capital plan results were also on track with the budget estimate, with capital spending at $2.4 billion. Direct borrowing for capital purposes was $1.7 billion, it said.