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The Globe and Mail

Alberta deficit last year $1.3-billion lower than expected

Alberta Finance Minister Lloyd Snelgrove speaks to the media about the 2010-11 annual financial report, at the Alberta legislature in Edmonton, on Wednesday, June 29, 2011.


Alberta's bottom line is looking less saggy, but critics say the province is getting financially fit by blind luck rather than through prudent planning.

Finance Minister Lloyd Snelgrove announced Wednesday that the province posted a $3.4-billion deficit in the fiscal year that ended March 31. That's $1.3-billion less than the projected deficit of $4.7-billion.

Mr. Snelgrove credited higher royalties from oil sands operations along with departmental cost-cutting. The governing Conservatives are also stretching out some capital construction projects to save money.

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"We've held the line on spending," Mr. Snelgrove told a news conference at the legislature.

"Alberta continues to be in one of the strongest positions of all the Canadian jurisdictions," he said.

Revenue from Crown leases and investment income were also higher than projected.

Mr. Snelgrove rejected suggestions from opposition politicians that Premier Ed Stelmach's government was simply fortunate because the price of oil – Alberta's industrial staple – is rising.

"You hunt where the ducks are," he said. "We're sitting on one of the largest deposits of hydrocarbons in the world. It would be folly to not make the best use of that asset that we can."

Mr. Snelgrove also announced that the provincial economy grew 3.8 per cent in fiscal 2010.

The province's Sustainability Fund, which the government has been using in recent years to cover off multibillion-dollar budget deficits, is now at $11.2-billion – about $3-billion more than expected.

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Revenue was $34.9-billion, $886-million more than forecast.

Spending was $38.3-billion, $452-million lower than forecast.

Mr. Snelgrove said one area in which the government didn't hold the line on spending was in health care, which went up $1.9-billion to $15-billion.

"This increase recognizes the priority Albertans place on our publicly funded health-care system."

NDP Leader Brian Mason said the numbers reflect a government that practises "fire brigade budgeting" – throwing millions of dollars at emerging problems such as health care with little regard for overall planning or cost saving.

He said the government could redirect millions of dollars that currently go to projects such as the horse-racing industry, a new home for the lieutenant governor and experiments to reduce greenhouse gases by liquefying and storing them underground.

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"Good government is about setting the right priorities," Mr. Mason said.

Both Mr. Mason and Hugh MacDonald, the Liberal finance critic, urged the government to give $100-million of its unexpected savings to school boards provincewide that have had to lay off hundreds of teachers to meet their budgets.

"Before Canada Day, [I hope]this government will change its mind, subtract $100-million and provide it to school boards," said Mr. MacDonald.

Mr. Snelgrove said the government already generously funds education to the tune of $6.2-billion a year and how school boards use the money is up to them.

"It isn't something that the Alberta government takes lightly," he said.

Mr. Mason took the issue a step further. He noted the $100-million needed for education is equal to the money being sought by the City of Edmonton to build a new hockey arena for the NHL's Edmonton Oilers.

The arena project is controversial because Oilers owner Daryl Katz would, in return for a $100-million contribution, reap all the revenue from the proposed $450-million downtown multipurpose facility 11 months out of the year.

Mr. Stelmach has stated publicly there is no money for private entrepreneurs, but Mr. Mason said he isn't convinced the government won't find a way to slip Mr. Katz the cash through the back door.

Choosing a billionaire over students would send a strong message to voters, Mr. Mason suggested.

"That is not a priority I think we should be following when we're laying off teachers."

Scott Hennig of the Canadian Taxpayers Federation said the government continues profligate spending that exceeds targets which take into account inflation and population growth.

"They're going in the wrong direction," said Mr. Hennig. "Hoping for higher revenues is not a plan."

The government is forecasting a budget deficit of $3.4-billion in the current fiscal year, with a return to budget surpluses by 2014.

Budgeting is more than just a numbers issue in Alberta. Government spending is rising yearly to match a population marching toward four million, but the Tories have been criticized for failing to be true to their fiscally cautious roots.

They are being challenged by the upstart right-of-centre Wildrose Party. In January, Mr. Stelmach reportedly faced a revolt by caucus hardliners over the deficit budget, which he pushed through to keep infrastructure spending going.

Mr. Stelmach also announced he would step down this fall. Six contenders are now vying to become party leader and premier.

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