Expect a difficult budget: Kenney
Energy prices will soften the blow, but restrained spending needed, premier says
Premier Jason Kenney says Alberta is in for a tough budget on Thursday after a year of COVID -19 emergency spending, even as oil prices begin to rebound.
Taking questions at a news conference Tuesday, Kenney said energy prices have allowed the government to revise its deficit projection from 2020-21 to be “in the range” of $14 billion.
The finance ministry hours later declined to confirm Kenney's estimate, and there was no link to the news conference on the government website.
In November, it was anticipating a $21.3-billion deficit for the 202021 year.
Kenney said Alberta would continue to restrain spending, but repeated that there will be no balanced budget until after the province gets out of the pandemic.
“With what we've been handed by COVID, we cannot realistically balance the budget in the next two years, but I think we can make meaningful progress if we continue to hold the line on spending, which is what we've done,” said Kenney.
He added the government needs to make “targeted” investments to support the pandemic response and economic recovery.
“As much as I hate deficits, now would be the worst time to cut billions of additional dollars in spending when we need it in health care, and we need it to help stimulate economic growth,” he said.
The Alberta government was criticized for projecting optimistic oil price revenues in its last annual budget, but Kenney said he wanted to take conservative commodity price projections into account for the latest.
“We will not be making that mistake. We will be very cautious on projecting revenues, and any incremental revenues that might come to Alberta through unexpectedly high energy prices will be very helpful in reducing the deficit, and reducing the projected increase in debt,” he said.
As of Tuesday, West Texas Intermediate was just over US$61, while Western Canadian Select was almost $50.
Ahead of the latest budget, Kenney has set a target to not exceed a 30-per-cent debt-to-gdp ratio.
“It's very important to signal to Albertans, and to investors, to bond markets, that we have very solid targets, or what you would call fiscal anchors, that will not move,” he said.
Meanwhile, the legislature will continue its current session rather than start a new one, meaning there will be no new throne speech outlining the government's agenda until the fall. After the budget is introduced, it will break for a week before sitting.
Kenney said the pandemic has presented too many challenges to begin a new process and set a new agenda beyond what was presented before COVID-19.
“Logistically the ceremonial aspects of doing a throne speech are very complex because of COVID restrictions, so as you know we have to have a very limited presence of members in the house,” said Kenney.
His government still hopes to table bills that were not introduced because of interruptions.
“I think there'll be a natural time for all of us to, post-pandemic ... in a sense, hit the reset button,” he said.
The government is scheduled to deliver its budget address at 3:15 p.m. Thursday.
As much as I hate deficits, now would be the worst time to cut billions of additional dollars in spending ...