The Alberta NDP's first budget is expected to be awash in red ink when it's tabled on Tuesday afternoon, providing the first full accounting of the province's fiscal situation as stubbornly low energy prices and mass layoffs on the oil patch are expected to have pushed a sputtering economy into recession.
Premier Rachel Notley has promised that there will be no drama in her government's fiscal plan, vowing to protect public services and not introduce a provincial sales tax. Here are five things to look for in the first full Alberta budget in 18 months.
Finance Minister Joe Ceci has warned that the provincial deficit could balloon to $6.5-billion over the next year. While that would be the largest deficit in decades, Alberta has enough money in its rainy-day fund to cover that shortfall. Before the latest collapse in oil prices, the province's contingency account was expected to be drawn down to $3.5-billion by the end of March, 2016, after covering the deficit.
Mr. Ceci's deficit won't be the largest the province has faced in its modern history – that distinction belongs to then-premier Don Getty's 1987 budget. Mr. Getty's deficit equalled 6.9 per cent of provincial gross domestic product, while Mr. Ceci's shortfall is expected to be around 2 per cent of GDP.
The NDP has pledged to balance the books by 2020. Last Wednesday, Mr. Ceci extended the government's target to the end of the decade due to the continuing low price of oil. The Finance Minister's correction was the second one-year extension by the NDP, following the party's admission during the spring election that the math in its platform was wrong and achieving balance by 2018 wasn't possible.
Along with the government's new spending plan, Mr. Ceci will be tabling a report about infrastructure spending on Tuesday afternoon written by former Bank of Canada governor David Dodge. In June, Mr. Dodge was commissioned to provide the government with advice on the proper balance of deficit spending and infrastructure investment during the NDP's first mandate.
Mr. Dodge isn't the only outsider brought in by the NDP government to provide advice. Ms. Notley now has four panels reporting to her government and drafting advice on the economy, climate change, energy royalties and mental health issues.
In mid-October, Ms. Notley's office created a 10-member advisory panel on the economy headed by the dean of the University of Alberta's business school. The panel is expected to report on a quarterly basis to the Premier until the end of her term.
Dave Mowat, the head of crown-owned bank ATB Financial, is heading the NDP's review of energy royalties. Professor Andrew Leach, an energy economist, is heading a climate change panel. Both are expected to report before the end of the year, but there may be indications of early advice on a possible carbon tax in the budget.
While the Notley government has kept Mr. Dodge's conclusions for infrastructure spending in Alberta a secret until Tuesday's budget, the former central banker has written in the past about the need for a large and immediate investment due to low interest rates and weakness in Alberta's economy.
"We believe there is a multiplier effect that will take place with investment in good public infrastructure projects, so we will as a cabinet and caucus make some decisions in the short term about how quickly we move on the recommendations of the Dodge report," Mr. Ceci told The Globe and Mail in September.
From flood mitigation measures in Calgary to a new super hospital in Edmonton, there is no lack of expensive capital spending being planned by counties and cities across the fast-growing province.
After her government took office in the spring, Ms. Notley's government passed a stop-gap spending bill in June to restore $624-million to schools, hospitals and social workers, reversing cuts brought in by former premier Jim Prentice. While Tuesday's budget is not expected to make any steep cuts, the government has said that it is looking for efficiencies and could make smaller cuts in non-essential areas.
Along with restoring money to government departments in June, Ms. Notley's NDP raised corporate taxes to 12 per cent from 10 per cent. Also, the province's 10-per-cent rate on personal incomes, once the centrepiece of the so-called Alberta Advantage, was ended and replaced by five new tax brackets that increase to 15 per cent for those making over $300,000.
While Mr. Ceci and Ms. Notley have repeatedly ruled out a provincial sales tax, new taxes and fees are a possibility on Tuesday. Mr. Ceci has said to expect "no substantive" surprises, but Albertans could face a new carbon tax or higher fees.