Reenergized: Alberta forecasting a $12.3 billion surplus thanks to high oil revenues
High revenue from a rejuvenated energy sector will lead Alberta to surplus of more than $12.3 billion this fiscal year, according to the province.
The number was included in the second quarter fiscal update rolled out Thursday by Finance Minister Travis Toews.
The $12.3 surplus is down $900 million from first quarter projections, but $11.8 billion higher than what was predicted in Alberta's last budget.
And by and large, there's one thing to thank.
Non-renewable resource revenue is forecast at $28.1 billion in the 2022-23 fiscal year.
That's a record-setting number, far surpassing the previous high of $16.2 billion in 2021-22.
It comes on the heels of oil prices in the US$100-a-barrel range during the first quarter update. Benchmark West Texas Intermediate has since softened, but remains strong at around US$80 a barrel.
Provincial projections have it at US$91.50 per barrel for 2022-23: US$21.50 more than estimated in the budget.
Personal and corporate income tax also drove up provincial finances, with revenues forecast at $13.3 billion and $6.3 billion, respectively.
But while the oil and gas industry has experienced an extremely profitable year, many individual Albertans can't say the same.
Affordability is still a significant problem for millions, thanks in part to supply chain issues and worldwide inflation.
Premier Danielle Smith announced a relief package Tuesday that she claims will help those in need.
The $2.4 billion dollar pledge was rejigged in Thursday's fiscal update, bumped up to $2.8 billion.
The roughly $300 million extra is earmarked for the 2024-25 period and should account for long-term changes to benefit and income indexing.
But the majority of the relief announced earlier this week -- including payments to families and seniors and a pause on fuel tax collection -- are slated to only be temporary. Thursday's update hints that the government will not bring in additional inflationary relief measures.
Previously announced payments are set to take hold in January.
The province says its total revenue currently sits at $76.9 billion, and expenses account for roughly $64.6 billion.
But in the next fiscal year, Albertans can expect to see some differences.
For starters, the province expects to cut roughly $671 million in spending in 2023-24.
Officials say services can be maintained even after inflation because crude-by rail expenses are coming off of the books.
There's another big change that will free up millions.
COVID-19 expenses were over and above regular health expenses during the last few fiscal years.
A government representative tells CTV News that "in 2023-24 and 2024-25, as COVID moves to an endemic state, costs will diminish."
They say any ongoing financial impacts of the pandemic will be evaluated in the government's next update.
RAINY DAY RETHINK
Despite the energy-infused windfall, payments to the Alberta Heritage Fund are being drastically scaled back.
The last budget called for $2.4 billion to be put to that fund. It now looks like only $263 million will be -- that's a drop of $2.1 billion.
A lower-than-expected return-on-investment could be the culprit.
A SURPLUS SURPLUS
The massive surplus, lower expenses and Heritage Fund backtrack could allow the province some spending wiggle room.
Its first plans involve paying down debt by $13.4 billion this fiscal year. That will reduce complete taxpayer-supported debt to $79.8 billion.
But where the rest of the surplus goes is still anyone's guess.
And while energy prices aren't expected to stay this high forever -- the current surplus estimate for 2023-24 is $5.6 billion and $5.3 billion in 2024-25 -- the financial outlook is still a strong one.
The province is expected to table a budget early next year.
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