The government of Alberta today reported that the province recorded a surplus for the 12th consecutive year in 2005-2006, as revenues exceeded expenses by $8.7 billion.

Strong energy prices pushed resource revenue to a record $14.3 billion in the year, allowing the government to boost support for infrastructure and increase its savings.

“In the past year we saw record oil and natural gas prices and land lease sales,” said Finance Minister Shirley McClellan. “That kind of activity won’t continue indefinitely, which is why we made financially responsible decisions to invest in capital and increase the province’s savings.”

Of the $8.7 billion surplus, $3.6 billion was transferred to the Capital Account to help pay for capital projects in future years. The government expects to draw down most of this cash over the next three to four years to pay for planned capital commitments.

Another $2.7 billion was deposited in the Heritage Fund and other endowments, including $750 million for the new advanced education endowment. The remaining surplus was left in the Sustainability Fund. Including the cash to be transferred from better than forecast fourth quarter results, assets in the Sustainability Fund will be $5.2 billion, $2.7 billion higher than the minimum target level of $2.5 billion.

“Alberta’s performance in the final quarter of 2005-06 was stronger than expected,” said McClellan. “Government will decide over the next few months how to best use the assets in the Sustainability Fund.”

Expenses increased $2.9 billion, or 11.8%, from 2004-05, primarily due to higher spending on health, education, municipal infrastructure and natural gas rebates. Spending from Budget 2005 increased $1.2 billion, almost entirely due to higher capital grants, natural gas rebates and emergency and disaster assistance.

“The increase from the budget was a response to needs that arose throughout the past year. At the same time, we managed the province in a fiscally responsible manner, keeping base operating expense close to our original estimates,” said McClellan.