Alberta expects to post a surplus of $5.5-billion in the fiscal year, more than double its estimate when it produced its February budget, despite pouring more than $1-billion into the effort to fight this year’s exceptionally damaging wildfires, floods and drought.
Provincial Finance Minister Nate Horner, who presented Alberta’s midyear economic update on Thursday, said the province’s fiscal fortunes are being buoyed by higher income-tax revenues and strong oil and gas royalties. He said the projected surplus, $3.2-billion higher than the initial estimate, shows that Alberta is well positioned for growth, despite economic headwinds.
“Our fiscal outlook remains strong and we fully expect to retain our position as the economic engine of Canada,” Mr. Horner said.
“We know some things remain beyond our control and we’re aware of the many challenges the current global economy presents – rising costs, higher interest rates and general economic uncertainty are weighing on businesses and consumers,” he continued. “We’re not immune to these challenges, but we’re in a strong position to weather them.”
The province has allocated $1.2-billion for disaster relief in the fiscal year, which ends in March. This is largely because of the wildfires that scorched large swaths of Alberta earlier this year. The total includes roughly $1-billion for wildfire response, $68-million for flooding response, $165-million for livestock producers affected by dry conditions and $55-million to support fire evacuees. A portion of the money will be recouped from Ottawa.
This spending has decimated the province’s 2023 contingency fund of $1.5-billion. Only $123-million remains, according to the government’s numbers.
Mr. Horner acknowledged that the reserve is “tight,” and he said there are discussions about wildfire spending becoming its own budget line, considering the severity and frequency of wildfires in Alberta.
The government has also allotted $1.6-billion to the Alberta Fund, which was established in February and can be used to pay down debt or for one-time capital projects. Mr. Horner said no decisions have been made about how that money will be used. But, he added, “If I had my vote, I would probably continue to pay down debt.”
Taxpayer-supported debt is expected to fall by $3.2-billion, to roughly $76-billion, by March.
Samir Kayande, the Alberta New Democratic Party’s finance critic, said Alberta is fortunate to be a resource-rich province. But he said the governing United Conservative Party is “injecting massive amounts of uncertainty” into the economy with its moratorium on renewable-energy projects, its proposition to leave the Canada Pension Plan and its attempt to use provincial legislation to override the federal government’s plans for a net-zero electricity grid by 2035.
Mr. Kayande said Albertans are not seeing the benefits of Alberta’s fiscal situation. He added that while he does not object to debt repayment, the government should do more to ensure residents have their basic needs met, and access to social services.
In Thursday’s update, the government noted that it had increased spending on health care, mental health and education.
The update forecasts that the North American benchmark West Texas Intermediate (WTI) oil price will average US$79 per barrel over the course of the fiscal year, in line with the 2023 budget.
The province then expects WTI to drop to US$76 in 2024-25, and then to US$73.50 in 2025-26.
Total revenue for the 2023-24 fiscal year is forecast at $74.3-billion, which is $3.7-billion higher than the estimate in the initial budget. Of that, non-renewable-resource revenue is expected to reach $19.7-billion – a $1.3-billion increase from the initial estimate, as a result of higher bitumen royalties, but $5.6-billion lower than in 2022-23.
One outstanding expense not yet accounted for is the purchase of DynaLIFE, a private, for-profit medical lab services provider. Alberta cut short a 25-year deal with the company in August after months of complaints about long wait times and service bottlenecks, and decided to create a system owned and operated by the government.
Mr. Horner said he had no further details on the deal, and directed reporters to the health ministry. He said he is not concerned that it could lessen the projected surplus, though Mr. Kayande has said that it will be a “huge bill.”