Province updates projected revenues and debt

Alberta’s finance minister is forecasting a $2.4-billion surplus at the end of the government’s budget year next spring.

In a fiscal update Aug. 31, Nate Horner said strong and prudent fiscal management will help the province remain the economic engine of Canada.

“Alberta’s finances remain strong, and thanks to our new fiscal framework, our fiscal position is poised to become even stronger,” he said.

Despite an unprecedented fire season and ongoing economic volatility, the United Conservative government corrected an earlier surplus projection, increasing it by $94 million.

It has also adjusted its revenue stream, contained in the 2023 budget, from just over 70.6 million dollars to 71.1, a jump of almost $500,000. Strong  2022 personal income tax assessments and corporate profits are behind the rise.

Translated, that means more people and more companies in Alberta.

“We have population growth pegged at about 4.4 per cent right now. That’s a very high projection,” Horner acknowledged.

“I know that our economists in the department are having a hard time believing it, but it’s not only strong immigration but inter-provincial migration.

Part of the gain, the finance minister continued, is the influx of Ukrainian refugees to Alberta.

But, as the province welcomes new residents, Horner said he knows it brings with it other challenges like the current housing crunch and homes becoming less affordable.

“I think that it’s inevitable. We had an Alberta Calling campaign, leveraged our affordability to make people want to come and make a home in Alberta, and over time that’s changed,” he said.

Horner believes things will rebound as new housing and communities are built up post-pandemic.

As it shares its latest projections for the current year, the province is also giving Albertans a glimpse into the future, anticipating a jump in corporate and personal income taxes in 2023-24 by $1.5 billion, $889 million of which is corporate.

Government economists are also predicting bitumen royalties will climb by $515 million during that same time frame but will be countered by an overall $694 million decline in overall resource revenue.

But, while highlighting many of the increases in expected revenues, the UCP government will also need to look at a growing deficit, forecast at $2.6 billion for the current year, and an overall debt reaching $77 billion, something Horner is aware of.

“When you pay down debt, the 2.6 billion that we’re going to use to pay down maturing principals, it’s going to save us 120 million going forward,” the finance minister said.

“If you notice in the report, at budget, our debt servicing cost was 2.85 billion and now it’s over three billion. That’s simply the effect of higher interest rates.”

That aside, however, Horner remains optimistic, even with the uncertainty surrounding interest rates.

The latest economic statement is forecasting a three per cent rise in the province’s real gross domestic product, a continued growing labour market deep into 2024, and an economy “well-positioned to withstand any challenges that arise.”