CALGARY -- The Alberta government may be heading to the bank to cover the sudden and massive jump in spending, approving itself to apply for a $25 billion loan.
“This is an eye-popping number and something that taxpayers should definitely be concerned about,” says Franco Terrazzano of the Canadian Taxpayers Federation.
“Because when we reopen our economy, no family or business is going to be able to afford higher taxes.”
Less than two months ago, the province projected a $6.8 billion dollar deficit in the upcoming year. However, that was before COVID-19 and crashing oil prices hit the province.
In his recent address to Albertans, however, Premier Jason Kenney said he expects that number will triple, to $20 billion.
“The assumption that underlined the budget numbers that we saw when it was released earlier this year were obsolete the day they were released, “ said University of Calgary economist Trevor Tombe..
"Things have been changing very quickly."
Anytime a province runs a deficit, it needs to borrow money to maintain its commitments. And while $25 billion may seem exceptionally high, the previous approved borrowing amount was $37 billion, just over two years ago.
However, Tombe says Alberta will be digging out of this economic slump long after COVID-19 has passed and the government may have to make some unpopular decisions.
“I think what we’re seeing today is the need to look at the other side of the budget,” he said.
"And entertain, or at least talk about, changes in tax rates, a sales tax in particular.”
Alberta Premier Jason Kenney has previously stated that he wouldn’t consider implementing a provincial sales tax during an economic downturn, when many people are already facing financial constraints.
