Seeing red: Alberta’s budget and plans to get out of debt ... eventually
CALGARY — Alberta’s government vows to run a small surplus within four years, but that will come at the expense of the public sector and provincial post-secondary schools.
It also plans to get out of the oil-by-rail business, paying an estimated $1.5 billion penalty to let the private sector take that over.
“Alberta today has the highest per capita deficit and fastest growing debt of any province or state in North America,” said provincial Finance Minister Travis Toews.
“That’s a severe change in direction from the fiscal heritage we had in this province.”
Toews says while Alberta will carry a deficit of $8.7 billion next year, the province will run a $600 million surplus by 2023.
Since taking office, Premier Jason Kenney has hinted that government workers should expect cuts, and the 2019-20 budget follows through on that.
The government plans to eliminate nearly 1,600 full-time jobs within the public service, though it says much of that will come through attrition.
That’s a nearly eight per cent reduction in the work force.
It’s also planning pay cuts across departments, ranging from one per cent to 11.5 per cent, while narrowing the ratio between managers and employees.
This comes as several contracts with government unions are about to expire and new negotiations set to begin.
“I don’t see the public sector as a problem, I see the public sector as a part of the solution going forward,” said Toews.
“We are hopeful that we can come to an agreement with them that they will recognize the need to work with us to bring spending restraint to the province.”
Mayor Naheed Nenshi said the budget was bad news for Calgary seniors, home owners and small businesses.
"We have kept our tax increases way below inflation and population growth since the beginning of the downturn," he said. "But guess what? We did it without hurting people.
"The challenge that we've got here (as a result of reduced funding to municipalities) is that while the province says they are maintaining front line services, they are (actually) downloading a bunch of this money onto the cities, which goes onto the property tax.
"There's no deductions to it. There's no way to reduce your property tax without moving, and it's particularly unfair to small business and to seniors.
"They've given us no choice," he said, "but to increase your property tax or cut services to the (city's) most vulnerable people."
Alberta’s colleges and universities will also be stung by the new fiscal plan.
Government grants to post-secondary schools are dropping by 12.5 per cent this year, which equals more than $117 million.
The five-year freeze on tuition increases is also expiring, and the province will allow rates to go up by as much as seven per cent a year.
The interest on provincial student loans will also go up by one per cent.
In the absence of new pipelines, the province will also continue to ship oil to the west coast by rail, but it will outsource the job to the private sector, scrapping the previous NDP government’s planned investment in rail cars.
That will cost roughly $1.5 billion due to previous commitments and contracts that will now be cancelled.
The province is also scaling back how much money it gives to cities and towns, as the Municipal Sustainability Initiative (MSI) winds down.
The government is slashing those grants by nine per cent, offering Alberta communities $236 million less than originally planned over the next two years.
Overall, the government is reducing it’s spending by 2.8 per cent.
But, it says there will be beneficiaries to this year’s budget as well.
It will reduce the corporate income tax rate from 12 per cent to 8 per cent over the next four years.
It will also maintain or slightly increase funding for many departments, including health and K-12 education, though that won’t match user growth in those areas
The province will collect more taxes on cartons of cigarettes immediately (increasing the fee from $50 to $55) and, come spring, plans to legislate taxes on vaping and a tourism levy on Airbnb operators.
The Alberta Teachers Association issued a statement soon after the budget was tabled, saying it “will bring larger classes and fewer programs for students.”
“This budget is, yet again, asking teachers to do more with less,” said ATA president Jason Schilling.
“The student population is expected to grow by 15,000 students, and school boards will not receive any more money to support them.”
The release said school boards will receive about $200 less per student than they received in the last school year, which equates to a two per cent funding cut.
“The government is playing a shell game in order to trick us into thinking enrolment growth is being funded, but at the end of the day, school boards have less funding per student, which means larger classes, fewer supports for students and programming cuts,” said Schilling.
Deficit and surplus projections
- 2018-19 - $6.7 billion deficit
- 2019-20 - $8.7 billion deficit
- 2020-21 - $5.9 billion deficit
- 2021-22 - $2.6 billion deficit
- 2022-23 - $600 million surplus