Report says Alberta deficit will top $886 million
A new report warns the province’s deficit this year “is certain to be higher than expected,” charging the Redford government banked on overly bullish commodity prices and expectations of economic growth.
But Finance Minister Doug Horner says it’s too soon to say where the deficit will end up when the fiscal year ends next March.
A Fraser Institute report released Wednesday, called Alberta’s 2012 Fiscal Time Bomb, said that the Redford government built its budget on overly optimistic oil and gas prices when it assembled the financial blueprint earlier this year.
In February, Horner released a $41-billion spending plan that projected the deficit would hit $886 million this year, before Alberta posts a modest $952-million surplus in 2013-14.
“The province relied on unrealistic economic assumptions,” the report states.
“The province’s deficit in 2012-13 is certain to be higher than expected.”
This year’s budget is based on natural gas averaging $3 per gigajoule and oil averaging $99.25 US per barrel. Through the first four months of the fiscal year, oil has averaged about $92 a barrel, while gas has averaged around $2.
Report author Mark Milke said in a statement the province also built its plans on aggressive revenue estimates for growth in the economy, personal income and corporate income.
Horner said if commodity prices remain weak, the province will take corrective steps to curb spending. He also disputed that government forecasts were too aggressive, saying they were in “the middle of the pack” with private sector studies at the time.
“It’s great to have great hindsight, 20-20 vision in the rear-view mirror,” Horner added. “Do we have a plan? Absolutely. Are we going to panic now? No.”