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Alberta sinks $3.4 billion into the red

The provincial government will dip into its sustainability fund to cover a projected $3.4-billion deficit in 2011-12.

The provincial government will dip into its sustainability fund to cover a projected $3.4-billion deficit in 2011-12.

The deficit is slightly higher than what was forecast last year, a result of lower than expected revenue, Finance Minister and Treasury Board President Lloyd Snelgove said Thursday.

"The forecast deficit in the year ahead is a result of the government's decision to continue its strong commitment to build hospitals, schools and other infrastructure that Alberta needs as we return to growth," said Snelgrove.

Albertans will see increases in motor vehicle registration fees and veteran plate applications but no tax increases.

Revenues dip with gas prices

Low natural gas prices, the high exchange rate and ongoing economic uncertainly continues to affect the province's revenues, which are expected by increase by $1.6 billion, or 4.7 per cent in 2011-12.

The province expects revenue to ramp over the next two years after decreases in overall revenue during the recession.

Alberta's GDP is expected to grow by 3.3 per cent in 2011 and 3.2 per cent in the next three consecutive years. That's slightly higher than Canada's expected GDP growth of three per cent.

Snelgrove said the budget "holds the line" on spending, which will increase by 0.5 per cent in 2011-12. Of the 24 government departments, nine will see increases in year-over-year funding, including employment and immigration, energy and infrastructure.

While the government has increased education spending, it cut funding for school infrastructure.

Health care spending will reach almost $15 billion in 2011-12, slightly lower than in 2010-11. The department's base operating grant will increase by six per cent and 4.5 per cent in 2013-14.

Expenses are forecast to increase an average of 2.2 per cent in the following two years.

The province's operating expenses will increase by $720 million to $33.9 billion, with average annual increases of 2.9 per cent the next two years.

This includes a six per cent funding increase to Alberta Health Services as part of the government's five-year health action plan.

Also included is a 4.7 per cent increase to support local school boards, which will cover a 4.4 per cent salary increase for teachers.

Roads, buildings, schools

The province's three-year capital plan includes $17.6 billion in infrastructure spending, including $6.6 billion this fiscal year.

The plan also includes $5.1 billion for municipal infrastructure, $4.6 billion for roads and highways, $2.6 billion for health care facilities and equipment and $1.2 billion for schools and post-secondary facilities.

The three-year plan does not include any new schools not previously announced by the province.

Budget critics

Several aspects of the 2011 budget fell under harsh criticism by opposition parties, shortly after its release Thursday.

"This conservative government continues to act as if it's playing with an endless supply of Monopoly money — this is not a game," said Alberta Liberal leader David Swann.

"Albertans are suffering in many areas of this province. They should not and they do not have to choose between an incompetent government and Wildrose extremism," Swann said.

Swann was critical of the government's 24 ministries, which he said should be reduced to 17. He said the carbon capture and storage fund should be reduced from $2 billion to $1 billion and infrastructure spending should be more spread out.

"We've seen significant increases in pay and benefits for MLAs and ministers that needs to be re-examined," said Swann.

NDP leader Brian Mason said this budget means the province will likely be faced with cuts to health care and education down the road.

"This government has backed down to pressure from the oil industry and from the Wildrose Alliance and cut royalties," Mason said.

"We have the lowest royalties in the world and the result is, we have to spend all of our savings just to keep the budget together this year," he said.

Mason accused Premier Ed Stelmach of spending "all the money in the sustainability fund on his way out the door so he can keep the health budget together. The province is predicting $11.1 billion will remain in the fund by the end of 2011-12 and $5.2 billion at the end of 2012-13.

"When that's gone, watch out for cuts," he said.

Wildrose leader Danielle Smith said the government is full of "spending addicts."

"They've managed to reach one step — finally acknowledging that inflation plus population is the right limit for your spending," Smith said.

"They've missed two other aspects, they've got to get their capital spending under control and they've got to cut wasteful spending," she said, adding that the government had failed to report the province's true deficit figure.

"We have a $3.4-billion deficit they admit to. That doesn't include $2.7 billion in additional capital borrowing for infrastructure grants," she said.

Smith said the government should stretch capital spending over five years instead of three, eliminate the $2-billion carbon capture fund and the venture capital fund.

"Heck, even the renovations on the new MLA offices would save about $150 million. They're not even looking for those very simple ways to be able to save taxpayer money," said Smith.

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