Alberta expected to unveil largest deficit budget in its history
Published Sunday, October 25, 2015 5:59PM EDT Last Updated Sunday, October 25, 2015 7:05PM EDT
The Alberta NDP is expected to reveal what could be the largest deficit budget in the province's history when the fall legislative session kicks off on Tuesday.
Rachel Notley and the NDP swept to power last May, taking over the reins of a province that is dealing with the economic fallout of slumping oil prices.
The government was initially aiming for a $5.5-billion deficit this year and balanced books by 2019-2020 in its platform, but it looks as though those promises will be unattainable.
Alberta's finance minister, Joe Ceci, hinted earlier this week that the deficit could stand just shy of $6.5 billion for 2015-16 and its books will remain in the red for another year.
"It's going to take a little longer to reach balance than outlined earlier," Ceci said Wednesday.
A budget released by the former Progressive Conservative government in March was defeated when the NDP took power in the May 5 election. That document called for a $5-billion deficit, but aimed to put the province back in the black by 2018.
Duane Bratt, the chair of department of policy studies at Calgary’s Mount Royal University, told CTV News Channel that economic situation in the province is "ugly" and said that the NDP's budget reflects those struggles.
"It will be largest deficit in Alberta history, and to put this in context, there was a $1-billion surplus (in 2014-15), so that's a pretty big swing," said Bratt.
Despite public awareness of impending deficits for months now, Bratt said the NDP will likely still face some backlash.
"I think there's still going to be a sticker shock when this occurs and the Opposition Wildrose Party -- that campaigned on a balanced budget that was never quite clear how they were going to have a balance budget -- is going to really take aim at the NDP," he said.
Ceci said earlier this week that the government was forced to the make changes to protect critical infrastructure projects, and save it from making deep services cuts and mass layoffs in the public sector.
"Our economy cannot withstand any of these actions now," he said.
Ceci also blamed the deficit on Alberta's oil shock, which has drained provincial coffers billions, and the missteps of past regimes.
"(The shortfall) is also due to the failure of previous governments to save, to diversify our economy, and to diversify government revenue streams," he said.
Bratt said that the NDP "anticipated" the budgetary shortfall and have promised to "stay the course" and shield the public sector from job cuts.
But he added that they instituted several measures to increase the province's revenue streams, such as a progressive income tax and bump in corporate income taxes.
Bratt says it remains to be seen whether the government will implement "additional revenue measures" in the budget or will be forced "live with" the large deficit.
"The question is: Is your goal just to wait for the price of oil to return again, or do you start measures to deal with the low price of oil?" he said.
"Right now it looks like they're just going to try to weather the storm, but a $6.5-billion deficit is just is not sustainable."
Melville McMillan, an economics professor at the University of Alberta, told CTV News Channel that he doesn't expect a "generous budget" from the NDP, but it likely won't impose austerity measures either.
"I think what we're going to see is that the provincial government will try not to cut spending and try to put some emphasis on infrastructure spending in an attempt to assist the economy," said McMillan.
But, he believes this spending won't come at a cost to most Albertans.
"I don't think we're going to see the average taxpayer hit in this immediate budget," McMillian said.
However, McMillan believes the province will have tough decisions to make going forward, as it has "maxed out" on corporate tax rates and royalties from the oilsands.
McMillan added that the government will have to look at either very "substantial cuts" in services and reducing the size of government, or increasing taxes in a way that will "hit the average Albertan."
With files from The Canadian Press