MoneyBalancing Alberta’s budget by 2022 will require tough choices on spending, taxes: economist
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It's exactly what many oil and gas companies wanted to see, despite how much credit they give Rachel Notley for her performance during her single term in power. Tamarack Valley Energy CEO Brian Schmidt has struggled to attract investors in the last couple of years when he holds meeting in places like New York. A new provincial government could be enough for pent up investment dollars, and the accompanying jobs, to start flowing into Alberta. "Finally we have something that they will look at as positive," said Schmidt. "For investment, this gives a big boost to our jurisdiction.
Premier's plans to balance Alberta's budget within three years won't come without some tough choices, and it's not going to solve the province's future fiscal frustrations, according to University of Calgary economist Trevor Tombe.
Thesaid Wednesday he was putting together a "blue ribbon panel" of people to help his government take a hard look at the province's financial situation and how best to move forward with his newly-formed government.
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"They'll have a mandate to report back this coming summer on the real state of the province's finances," Kenney said, adding that an announcement could come on that as early as next week.
"That will then help to inform our budget planning."
Kenney said Albertans shouldn't expect a budget "soon," but through his election campaign, one of the mainwas getting the province not only out of the red, but to a $714-million surplus by 2023.
"I would expect a budget for 2019/2020 in the fall of this year," Kenney said. "In the meantime, we will be operating on what are called special warrants."
According to Tombe, balancing the budget by 2022 could work, but the new government would likely have to either implement a sales tax or make major cuts to spending.
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"Given current policy, before any changes that the new government will make, the fiscal hole -- in the long term -- that Alberta faces is roughly equivalent to a 10 per cent sales tax on the revenue side or reducing program spending by one out of every six dollars spent," Tombe said.
"That fiscal gap between what spending projections are and what revenue projections are, that's large."
Tombe said that large gap is one that many Canadian provinces face due to things like an aging population and increasing health-care costs. He added that the Kenney government will need to think more long term when it comes to things like spending on health care, as it's currently the biggest area of spending.
“Health spending accounts for well over 40 per cent of the budget and will approach 50 per cent in the coming years," he said. "That means cost increases in that ministry do contribute in a big way to changes in the overall deficit.”
Elections Alberta releases unofficial election results
Unofficial results of Tuesday's provincial election were released Friday afternoon and show the United Conservative Party with 63 seats and Alberta's NDP with 24 seats. While most of Alberta's 87 ridings were declared on Tuesday night, some of them remained too close to call until all of the out-of-district advance poll results were reported. READ MORE: Jason Kenney’s United Conservative Party wins majority government The 2019 Alberta election was the first time the province used a "vote-anywhere" system during the advance polls.
Tombe said the current plan for balancing the budget depends on keeping government spending flat for the next three years, adding "that does help address the long-term fiscal challenge, but it doesn't go all the way."
"Roughly speaking, balancing by 2022 is about half the job," he said. "What we do after 2022 is going to require more choices [to] be made, more fiscal adjustments [to] be made, either on the revenue side or the spending side."
He said much of that decision-making will be up to the soon-to-be-appointed blue ribbon panel.
Tombe said a combination of tax hikes and spending cuts isn't inevitable when the government does eventually table its first budget but it's up to the government whether Albertans could see one or the other, or a mix.
"To maintain the effective size of government while the population is aging, it’ll require disciplined and sustained action over time -- not an immediate drastic cut or any immediate large new tax," he said. "But we do need to think about sustaining gradual action over time, in order to make a difference.”
-- With files from 770 CHQR's Adam Toy
'We were blindsided': Energy companies owe one Alberta county millions in unpaid taxes.
Woodlands County faces a $4.3-million revenue shortfall after oil and gas companies failed to pay their taxes to the municipality last year. To make matters worse, taxes for this year are due in June, and if those companies don't pay up again the county expects the shortfall to double, to a total of $8.6 million, said Mayor Ron Govenlock. "We were blindsided," he said. "The problem really didn't surface until we started getting into the budget deliberations. The value of the two particular industry players that are oil and gas is so substantial that it represents in excess of 20 per cent of our tax income.
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