The Alberta government is grappling with lower oil prices by using up half their annual contingency fund in the first quarter.
In the first quarter update released Wednesday, the NDP government announced it had used up half of the $500 million risk adjustment fund that was built into the 2017-18 budget to manage fluctuating oil prices. The spring budget anticipated the oil prices to sit at $55 per barrel. Since April 1, the price has averaged $47.90.
The government has since announced they downgraded the expected price of oil to $49 per barrel.
St. Albert MLA Marie Renaud said that nobody wants to see a continuously growing debt and she is glad the contingency fund was used to help prevent more debt.
“I’m glad that we used it and that’s what it was budgeted for,” Renaud said.
The province has a $10.5 billion deficit projected for the end of the fiscal year. The debt is expected to hit $43.3 billion rather than the earlier predicted $45.1 billion.
Renaud said that she is concerned about the price of oil but she said her government is working on diversifying the economy.
“We have all said for many years that we have to get off the [oil price]rollercoaster and it’s not always easy to do that but I think that we are seeing a really solid plan to do that and we are starting to see some of that pay off,” she said.
Renaud said that the NDP government is diversifying the economy and starting to see positive results from the climate leadership plan.
But members of the opposition were once again displeased with the government’s financial numbers.
UCP MLA Glenn van Dijken from Barrhead-Morinville-Westlock said that he is extremely concerned with the debt and deficit in the province.
“This government has lead us into structural deficit for a period of time that is quite concerning,” van Dijken said.
Van Dijken said that the government needs to spend more efficiently.
“It’s not just cutting one thing here or there. It’s a matter of recognizing that we have an overall spending problem and generally when we look at getting to balance, it’s about finding efficiencies in many different parts of your operations,” van Dijken said.
Brian Bachynski, chair of the Chamber of Commerce and publisher at the St. Albert Gazette said he was also concerned that the government has no plan to pay back the money.
“This government has shown us it has no plan whatsoever to balance the books. Spending without regard to ballooning debt continues. The government says it will balance the budget by 2023. The only way to do that, if it doesn’t curb spending, is to increase taxes, and that will have a devastating impact on the business community,” Bachynski said.
The fiscal update projects revenue to drop by $648 million compared to budget forecasts due to the $377 million drop in resource revenue and the $312 million drop in personal income tax. But the government anticipates expenses to be $357 million lower than they first predicted.
Finance Minister Joe Ceci said that the government plans to look for another $200 million in savings.
Funding for some health and education projects may be deferred to later years to help balance the books.
Renaud said that she isn’t aware of any local projects that will be deferred, but said that it doesn’t mean local deferrals won’t happen.
Since the quarterly financial report was released the credit rating agency DBRS Ltd. warned of further downgrades to the province’s credit rating.