Budget 2019: Debt still grows but path to balance mapped out

The bottom line for debt for Alberta will be $93.2 billion by 2022-23. That’s not far off the former NDP government’s $97.1 billion debt forecast for the same year. Deficit projections between the current and former governments for the 19-20 and 20-21 fiscal years are also similar. Budget 2019 projects the combined deficit for those two years at $14.5 billion compared to the NDP’s final budget in 2018 projecting $14.9 billion over the same period. However, the current government is projecting a return to balance a year earlier than the NDP with the expectation of a nearly $600 million surplus by the 2022-23 fiscal year.

Graphic courtesy of GoA – Alberta’s current and anticipated tax rate compared to states and provinces on the continent.

Asked about this on Thursday, Toews challenged the notion the NDP budgets were credible while the UCP’s plan is the first in a long time to actually reduce operational spending. Toews also raised the issue of differing calculations used between the two governments in calculating their respective budgets.

But while the numbers aren’t so different on paper, there is no shortage of variances between the NDP and UCP priorities in their respective last and first budgets.

Tackling climate change has been replaced as a priority with job creation. Stabilizing operating costs have switched to spending reductions. And increased taxes have been replaced with reductions in corporate rates to spur investment.

As for changes, there will be a number of them as this government re-prioritizes its agenda with a focus on attempting to stimulate business investment and job creation by lowering corporate tax rates and attracting private-sector investment. Total provincial revenue is projected to rise by over $7 billion between 2019 and 2023 to $57.5 billion.

Personal income tax exceptions will no longer be indexed.

Municipal funding will get a reprieve before amounts get rolled back in 2020-21 fiscal year. That year will see Municipal Sustainability Initiative (MSI) funding reduced by $94 million followed by a further $142 million in 2021-22. A new province-wide municipal funding program will be introduced for the 2022-23 fiscal year which will replace MSI, the Municipal Transportation Grant and the City Charters Fiscal Framework Act.

The tuition cap will be removed allowing post-secondary institutions to raise rates by a maximum of seven per cent annually over each of the next three years. Post secondary funding is also being reduced from $5.4 billion dollars to $4.8 billion by 2023.

If you are a smoker, you can expect to pay more starting tonight. The price of a carton of cigarettes is increasing by $5 dollars to $55 dollars a carton. There will also be a tax on vaping but the provincial government has yet to specify exactly how much.

Registering your personal vehicle will cost more starting next year. The price is going up $5 to $80. Recreational vehicle registration will now cost $150 dollars.

The province is also realigning child benefit programs, combining two programs into one. The move could result in a 15 percent increase in benefits for low income families.

For those renting out properties on a short-term basis through services like Airbnb, legislation is expected which will, “level the playing field,” with other accommodation providers who pay a four per cent provincial tourism tax.

The budget also calls for 50 new prosecutors and programs aimed at reducing rural crime.

For capital spending in southeastern Alberta, this year’s budget is short on outlined specific projects. The most noteworthy – if not the only – being the Medicine Hat Regional Hospital which will continue to see investment of $9 million and $6 million in 2019 and 2020 respectively as the expansion project wraps up.

Graphic courtesy of GoA – Budget 2019 expects to see per capita spending inline with the combined average of Ontario, Quebec and B.C. by 2023.

There is no specific spending outlined that would indicate funding for HALO but the ambulance portion of the Health ministry budget will see reductions of $11 million between the 18-19 fiscal year and 19-20’s.

Similarly, there is no specific spending dedicated to the twinning of Hwy. 3 but $597 million has been budgeted for unspecified twinning and widening projects provincially between now and the 2022-23 fiscal year.

Budget 2019 will suspend previously indexed tax credits and brackets until the provincial fiscal outlook improves, though, this isn’t expected to see a change to Albertan’s lowest overall tax burden nationally.

Total revenue is forecast to remain flat at $50 billion in 2019-20 and $50.1 billion in 2020-21, before increasing to $57.5 billion by 2022-23. According to the province, revenue growth is being impeded by market access issues (pipelines). Oil is being forecast at $57 dollars U.S per barrel for 2019-2020.

One potential for increased investment in Medicine Hat will be the return of the Petro-chemical Diversification Program (PDP). That fund could see companies such as Methanex, CF and CanCarb apply to the program which has previously assisted petro-chemical operations in the Industrial Heartland during two phases under the NDP government.

As for natural gas, Budget 2019 cites increased production in North America for driving down prices but also the lack of market access for the product

Library, police and family and community support grants will be maintained in Budget 2019.

The province plans to cut the public sector by 7.7 per cent over four years. This equates to approximately 15-hundred job losses, primarily through attrition.

The corporate income tax rate is being cut. It will decrease from 12 percent to 8 over the next four years.

The province is also spending $1.5 billion dollars to transfer crude by rail contracts to the private sector. The previous NDP government had a plan to transport more Alberta oil by rail but the UCP has cancelled that program.

And, he added, especially in light of the recent federal election, “we have to ensure we have our fiscal house in order.”

by Alex McCuaig

Budget 2019: Debt still grows but path to balance mapped out

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