Alberta to provide update on whether province still on track for $13 billion surplus


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Alberta’s surplus is expected to shrink by nearly $1 billion to $12.3 billion amid falling global oil prices and as the UCP government prepares to inject $2.8 billion. dollars over three years in its expanded accessibility measures.

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Finance Minister Travis Toews delivered the second-quarter budget update at the McDougall Center in Calgary on Thursday, saying that while estimates have changed, volatility in the energy market is “extreme.”

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“My friends, Alberta has the strongest record of any province,” Toews said.

Although total revenues are expected to increase slightly to $76.9 billion in 2022-23, expenditures are expected to be $64.6 billion – $2.5 billion more than originally budgeted. – more than half of which is spent this year on an inflation-fighting plan announced by Prime Minister Danielle Smith on Tuesday

WTI is now expected to average US$91.50

In the initial 2022-23 budget, the government estimated that the cost of West Texas Intermediate (WTI) crude would average US$70 per barrel. Instead, the price per barrel went well beyond that, reaching as high as US$120 a barrel in early June, pushing the projected surplus in August to $13.2 billion.

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Thursday’s update expects WTI to average US$91.50 a barrel for the remainder of the fiscal year, down from August’s estimate of US$92.50.

While the government had planned to pour just under $3 billion of the surplus into the Heritage Trust Savings Fund in the last quarterly update, $1.7 billion in interim cash is clawed back in the province’s general revenue fund, keeping $1.2 billion in investment income in the fund.

However, the largest single-year debt payment in Alberta history remains on the books, at $13.4 billion in 2022-23. The UCP government will spend an additional $10.8 billion over the next three years on savings and debt reduction.

Affordability program set at $2.8 billion over three years

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The massive injection of inflation-fighting aid announced by Smith will be mostly paid for by the province’s surpluses.

While Smith’s office estimated Tuesday that it would cost $2.4 billion, government officials said Thursday that figure roughly represents the expenses for the first two years.

With an additional $300 million in 2024-25, the support package aimed primarily at families with children, seniors and vulnerable people would cost the government $2.8 billion over three years.

The update did not include an estimate of how much it would cost the Treasury to make $600 payments for each senior and child under 18 in households with annual incomes below $180,000. , as well as for those receiving income from Alberta for Payments for the Severely Disabled (AISH) and Persons with Developmental Disabilities (TED).

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The province also did not provide an estimate of how much it will cost the Treasury to re-index benefits, including AISH and elderly benefits, to inflation.

The cost of the previously announced $50 per month rebate on eligible electricity bills from July to December, at $300 million, which was already budgeted, will double as this program is extended.

As the country prepares for a possible recession, Alberta’s real gross domestic product (GDP) is expected to grow 4.8% in 2022 and 2.7% in 2023, recovering from the COVID-19 pandemic and surpassing its 2014 peak this year.

The province’s debt-to-GDP ratio, which Toews previously pledged to keep below 30 per cent, is expected to be 9.9 per cent.

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Taxpayer-supported debt is now estimated at $79.8 billion as of March 31, 2023. That’s $10.4 billion less than budgeted.

Bitumen royalties in 2022-23 are projected to be $19.4 billion, $9 billion higher than originally projected and $7.7 billion higher than the prior year as more projects energy companies move to “after payment” status sooner, paying higher fees.

The value of the investable assets of the Alberta Heritage Savings Trust Fund was $17.8 billion as of September 30.

New legislation to make way for some of Alberta’s affordability measures, including the reindexing of personal income taxes, will have to be passed in the new session which begins with a throne speech on Tuesday.

More soon…

ljohnson@postmedia.com

twitter.com/reportrix

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