Alberta pre-election budget hikes spending, raids savings, runs deficit

EDMONTON - Premier Alison Redford's Alberta Tories delivered a pre-election budget Thursday that increased spending to record levels and raided billions from the piggy bank, but promised the province will be out of the red within a year.

There are no tax hikes, no new taxes, no significant program cuts and no job layoffs. And there is more money to pay for everything from new police officers to smaller class sizes to student loans.

"We've delivered a budget that Albertans said they would support," Finance Minister Ron Liepert told reporters before delivering the 2012-13 spending document.

"That's our job: to listen to Albertans."

The plan is predicated on the price of oil staying high and even soaring to an average of US$108 a barrel by 2014, prompting the opposition Wildrose party to label the premier "Alison in Wonderland."

It currently sits close to US$100 a barrel.

The bottom line amounts to an $886 million deficit, the fifth in a row after 14 years of surpluses.

The budget boosts government spending by 3.3 per cent to a record $41.1 billion.

Program spending is up almost seven per cent, with substantial raises for education, health, cities and money for the most vulnerable.

The bills are to be paid for with rising oil revenues, higher taxes from a growing population and a $3.7-billion drawdown from the $7.5-billion Sustainability Fund.

The budget projects that with oil revenues and population growth, there will be a $952-million budget surplus next year and a $5.2-billion surplus the year after that.

Liepert denied the government is doing a pre-election bait-and-switch by tabling a feel-good budget that will be followed after the election by job and program cuts when the Tories conduct a government-wide financial review.

"There is no hidden agenda here," said Liepert.

"If somebody is trying to draw a scenario that somehow after the election we're going to come up with all these bogeyman theories, well, let them go ahead, because they're going to be wrong."

Redford has promised to pass the budget, then drop the writ on a general election, with a campaign likely to begin in mid-March. The Tories currently hold a huge majority of the seats in the legislature and have been in power for 40 years, but are being challenged on the right by the Wildrose.

Wildrose Leader Danielle Smith said the Tories are budgeting on a wish and a prayer.

"It's an Alison in Wonderland budget," said Smith.

"We're going into a budget with fantasy land projections so (the Tories) can manufacture a surplus. There's no possible way these numbers are going to work. They have no discipline on spending."

Brian Mason, leader of the NDP, agreed that the Tories are handing out "goodies" based on unrealistic projections. He said if Redford's team wins the election it will then either hike taxes or cut jobs.

"This budget is a little bit of dust in the eyes of Alberta citizens," said Mason.

Raj Sherman of the Alberta Liberals said the only way to be realistic about revenue is to move from the province's 10 per cent flat tax to a progressive one targeting the wealthy.

Sherman said his team will do that.

"The tough question is: Which leader has the political cojones to be honest to the people and bring in a fair, progressive tax for those earning over $100,000 a year?" he said.

However, the Alberta School Boards Association said it was pleased with more education spending, saying it will give school boards the flexibility they need to respond to community needs.

"We are cautiously optimistic but the reality is that only a portion of that increase is in base student funding," said president Jacquie Hansen. "As a result, school boards will be challenged to do more than just maintain the programming and services they have."

The Alberta Federation of Labour criticized the budget for giving away too much in taxes and oil royalties, and Public Interest Alberta said while it was pleased about AISH increases, it noted cuts to funding for new affordable housing.

The budget invests heavily in core areas.

There will be an almost eight per cent increase in operating funds for the Health Department and a six per cent increase in operating funds for Alberta Health Services, which delivers front-line care.

Operating budgets for grade schools are going up 3.4 per cent to $6.2 billion. There will be more money for smaller class sizes and for busing.

Post-secondary institutions are to see a 2.7 per cent boost to their operating funds to nearly $2.9 billion. An extra infusion of cash will buttress bursaries, grants and help students with their loans.

Payments under the Assured Income for the Severely Handicapped are to go up by one-third to $1,588 a month along with a rise in how much someone on the program can earn before clawbacks kick in.

Income support rates are to go up five per cent for Albertans in 34,000 homes who are training for work, looking for work or unable to work.

About $16.5 billion is to be allocated over the next three years to build schools, hospitals, roads, and other infrastructure.

This year, 14 new schools are expected to come on line, along with new medical facilities in Calgary and Edmonton. Work on a cancer-care centre in Red Deer continues.

Money is also to go to municipalities to hire 90 more Mounties and 55 more sheriffs. There will be 180 additional correctional officers and staff for a new Remand Centre in Edmonton.

There's also $11 million to boost environmental monitoring in the oilsands region.

All the bills are to be paid for by a roaring petro-powered economy expected to grow by 3.8 per cent in 2012.

The government is budgeting revenues at a record $40.3 billion.

Resource revenue will account for $11.2 billion — half of that from the oilsands alone.

Taxes are not up, but tax revenue is — close to $18 billion, half of which will come from personal income taxes.

Along with the budget Thursday, the government also delivered its third-quarter update for the current budget year. The province is on track for a $1.3-billion deficit for 2011-12 — much less than the $3.4 billion projected at budget time last year. The government credits higher than expected resource and tax revenues.

The Alberta Heritage Savings Trust Fund, a rainy day account that is separate from the Sustainability Fund, reports net assets of $14.4 billion as of the end of 2011.

The Alberta Federation of Labour called the budget a story of billions in giveaways.

Winnipeg Free Press, Fri Feb 10, 2012

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