Alberta budget 2017: More economic green shoots, but what about the debt?

Alberta budget 2017: More economic green shoots, but what about the debt?

Albertans will get a sense today whether the province's fiscal position has improved with higher oil prices, and if the NDP government will continue the province's plunge deeper into debt.

At a pre-budget photo opportunity in Edmonton Tuesday, Finance Minister Joe Ceci said the government will continue to be a shock absorber for Albertans affected by the recession and downturn in the energy sector.

Ceci said themes of this budget will be similar to the one he released in April 2016. He pointed to the 25 per cent reduction in school fees that was announced last week as a way the government is making life more affordable for families. 

"We're going to invest in the things that are necessary and doing that means that we need to run a deficit," he said. "That's not going to be a surprise for anybody. 

Ceci expects the battered Alberta economy to start recovering in 2017. The province's GDP is expected to grow by 2.4 per cent this year. 

The budget, which will be unveiled by Ceci around 3:15 MT, is expected to give the public a first look at how much the government expects to collect through the carbon levy that came into effect Jan. 1. CBC News will live stream the announcement.

The budget should also outline how that money will be allocated to programs to help Albertans reduce their carbon footprint, and for the province to transition to a greener economy. 

Capital projects are also a government priority, as the NDP sees infrastructure spending as a way to create jobs and jump-start the economy. 

According to a report by the Canadian Press, the government will announce the construction of 10 new schools as well as money for seven modernizations and nine replacement structures.

The government released a plan last week to spend $14.5 million to hire 50 new prosecutors and 30 court clerks to deal with an overburdened court system. 

Criminal lawyers are watching for an increase in legal aid funding to provide balance to the defence side of the legal equation.

Alberta Health is keen to introduce supervised consumption sites and replacement therapy programs as a way to combat the province's opioid crisis. The budget may have details on initiatives funded by the province, which will be aided by $6 million in emergency money announced by Ottawa last week. 

More debt?

Ceci suggested the budget may also have a plan for paying back the province's debt, which is projected to hit nearly $58 billion by 2019. 

He said the premier's promise to avoid a provincial sales tax remains in place and he refused to speculate about whether he would introduce any new user fees.

Last year's budget was built on a forecasted price of West Texas Intermediate oil of $42 US a barrel. Current prices are around the $48 mark.

The Alberta government has relied heavily on borrowing both to finance its infrastructure plan and to pay for its operations, much to the alarm of opposition MLAs. 

The third-quarter update, released last month, forecast the year-end budget deficit at $10.8 billion. Spending was up $2.6 billion over what was laid out in last year's budget.

Calgary MLA Greg Clark, leader of the Alberta Party, said the NDP's borrowing is creating a level of debt that can't be sustained and he worries the deficit will be even higher in 2017. 

"This government, like every government before them, is hoping to goodness the price of oil goes up," he said. "That is their only strategy."

Derek Fildebrandt, finance critic for the Wildrose Official Opposition, said the NDP is taking a short-term view of the province's finances by borrowing so much.

"If you are borrowing a quarter of your budget every single year, if you cannot sustainably finance government programs in the long-term, you're not protecting frontline services, you're jeopardizing them. Putting out hard decisions for someone else to make at a later time," he said.

"My fear is that the NDP, they're not looking beyond the next election."

Dragons' Den for government spending

Fildebrandt and Wildrose Leader Brian Jean released a proposal Wednesday to cut $2.6 billion in spending this year. 

The plan includes measures like cutting the public service bureaucracy through attrition and a hiring freeze ($312 million); freezing all government salaries ($210 million); reversing the government's decision to stop the privatization of hospital linen services ($210 million) and implementing recommendations made in 2015 of result-based budgeting panels ($250 million).

The party is also proposing a new commission made up of experts and MLAs that would look at ways to cut spending so the budget can be back to balance in three years.

Fildebrandt said the body would function like a fiscal Dragons' Den, a reference to the reality show on CBC Television where a group of experienced business people evaluate proposals from newbie entrepreneurs. 

Leaders of the Liberal, Progressive Conservative and Alberta parties also expressed concern with the government's direction.

Interim PC Leader Ric McIver is expecting more spending in Thursday's budget.

"A scorpion can't stop being a scorpion and an NDP can't stop being an NDP," he said. "I think you're going to see them spending their brains out, borrowing their brains out and putting Albertans in a bigger hole than they've ever been in before."

Liberal Leader David Swann is also concerned about the level of debt and hopes to see a plan to pay it back.

"We've been at them for long enough that it's surely time for them to talk about responsible ways for generating more revenue and addressing some of the overspending," he said.

While the government reached a new compensation deal with physicians, Swann said little has been done to find efficiencies in other parts of the health care system.