NO SHORTAGE OF PROPOSALS TO USE $2.4 BILLION SURPLUS

Alberta is poised to benefit from a surge in resource revenue this decade, which could lead to provincial budget surpluses to fund spending for today’s growing population – or savings to support future generations.

In its pre-election budget Feb. 28, the UCP government predicted Alberta will end the 2023-24 fiscal year with a surplus of $2.4 billion, even after spending $68.3 billion to fund health care, day care, education, and many other programs, like helping Albertans cope with high inflation.

Alberta realized a $10.4 billion surplus in 2022-23. Surpluses of $2 billion and $1.4 billion are predicted for 2024-25 and 2025-26.

The province is reaping the rewards of investments in the oilsands, high oil and gas prices, and renewed oil and gas industry activity that are boosting resource royalties.

However, non-renewable resource revenue could decline if there’s an industry downturn, as was the case in the aftermath of the 2014-25 oil-price crash. To help protect government finances, the UCP said it wants to adopt a new fiscal framework that requires future budgets to be balanced, surpluses to be tightly managed and used first to pay down debt, and spending increases to be restricted to inflation and population growth.

A new Alberta Fund would have the discretion to reduce debt, deposit money into the Alberta Heritage Savings Trust Fund or fund one-time spending.

“We want to make sure, as we enter a period now where we might have ongoing surpluses, that we are managing them in a way that’s going to be conservative and stable and prudent,” Premier Danielle Smith said.

Under the UCP plan, income generated by the Heritage Fund would be retained by the fund, rather than being used by the government. If the government had re-invested earnings back into the fund since it was established in 1976, and without additional deposits, it would be worth nearly $300-billion today, instead of $18-billion, Finance Minister Travis Toews said in his budget speech.

But the opposition NDP cast doubt on the possibility of future budget surpluses and called the Alberta Fund a slush fund to help the UCP get re-elected. NDP leader Rachel Notley says the budget’s forecasts are based on rosy projections, hidden plans and underfunding of services that have been cash starved by the UCP.

She was disappointed the 2023-24 budget doesn’t have measures to continue affordability payments set to expire after the May provincial election, or for reducing utility bills, or for increasing spending in areas like health care. The NDP would have funded a $155-million plan to revitalize Calgary’s downtown, which has the highest office vacancy rate in the country.

“This could be the last budget where Albertans have to worry about health, whether their government cares about it,” Notley said. “This could be the last budget that puts corporate profits ahead of working families in this budget, where Albertans have to wonder how many different ways in which their government is trying to fool them through the budget itself.”

There is no shortage of ideas on how to spend the surplus.

The Calgary Chamber of Commerce and the Calgary Downtown Association, for example, would like to see provincial dollars to revitalize Calgary’s downtown. Economists Trevor Tombe, Joel Emes, Tegan Hill and Jack M. Mintz have proposed using the surplus to pay down debt, investing in the Heritage Fund and lowering personal income taxes.

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