St. Albert Mayor Cathy Heron said there were “no surprises in the budget” and was happy to see money going to emergency services, municipalities, and the twinning of Ray Gibbon Drive.
High oil and gas revenue and robust post-pandemic recovery left Alberta with a surplus of $2.4 billion forecast for 2023-24, the provincial government announced this week.
UCP Finance Minister Travis Toews tabled the Alberta budget on Tuesday, Feb. 28, which highlighted the province’s new fiscal framework and focuses on healthcare and public safety.
The fiscal plan, which was tabled 90 days before the scheduled spring election and is Premier Danielle Smith's first budget, will see spending grow by just under 4 per cent.
Heron said she is happy to see the books balanced and investment going into savings.
“I was very pleased to see a fair amount of money going towards emergency services, which is really good news for St. Albert, I think.”
And while the province is sitting in a better fiscal position than it has in years past, the government will be introducing legislation to require balanced budgets, except for under exceptional circumstances.
The total revenue for the province is estimated to be $70.7 billion, which is $5.4 billion lower than the forecast for the year. Expenses for the province were higher than originally anticipated— agreements, such as the Alberta Medical Association (AMA) contract, accounted for some of the increase.
The mayor was happy the funding for twinning Ray Gibbon Drive was on the books in the third year of the provincial budget, reflecting the cost-sharing agreement completed between the City of St. Albert and the Government of Alberta in 2019.
“We appreciate the Government of Alberta’s support of this integral economic corridor,” Heron said, noting she hoped the province would help with servicing the Lakeview Business District in the future.
The mayor said she was happy to see enhanced funding committed to municipalities across Alberta through the Local Government Fiscal Framework (LGFF) starting in 2025-26.
Earlier this year, the city sponsored an Alberta Municipalities resolution, calling for the baseline LGFF funding envelope to be increased and to grow at a 1:1 ratio linked to provincial revenue.
“Ideally, we would have seen an increase to LGFF capital funding in its inaugural year, as infrastructure funding for municipalities is nearly 40 per cent lower than the annual average prior to the 2015 recession in Alberta,” Heron said.
But the mayor said the city appreciates that the province made improvements to provide municipalities with long-term and stable funding by doubling the operating component of MSI/LGFF now, and partnering on a 1:1 growth ratio moving forward.
Heron said she is currently working with her financial staff to see if there is a one-time project the MSI funding from Budget 2023 can be used for.
“Or maybe it would go to some of our non-profits as a grant, so we'll still have to figure that out. But that was a bit of a surprise and welcome news,” she said.
St. Albert NDP MLA Marie Renaud said municipalities have dealt with losses over the past few years due to cuts in MSI funding.
“Down the road in a couple of years it will start to increase. But that doesn't change the fact that St. Albert has dealt with years of cuts. And those cuts have resulted in changes and reductions in services and also projects,” she explained.
City staff are in the process of studying the provincial budget in more detail and a report will be presented to council on how the budget
will impact municipal programs, services, and infrastructure on March 14.
Renaud said she was “not surprised” by the results of the budget, especially with the election looming, claiming the government was “vote buying” in a number of areas with their new budget.
“Overall, I'm actually quite disappointed [and] a little bit surprised that they didn't start to undo some of the enormous damage that they caused over the last four years,” Renaud said.
After years of reigning in spending, the province will be investing a record $24.5 billion into health care, an increase of 4.1 per cent from 2022.
In an embargoed news conference on Tuesday, Toews said former UCP government did the “heavy lifting” when it came to cutting spending and now the government is able fund priorities important to Alberta.
“Right now we are really facing an affordability challenge that’s been unprecedented in recent time,” Toews said.
UCP MLA for Morinville-St. Albert Dale Nally said the budget is a reflection of the hard work the UCP has already done balancing the books.
“We campaigned in 2018 on a platform of fiscal restraint, because it was a different time, we had a significant deficit in the budget and the economy was not where it is now,” he explained.
“Our plan worked. And now because our plan worked, and business has come to the province, we are in a position to make strategic investments. And that includes investments in health care and education,” he said.
As NDP Critic for Community and Social Services, Renaud voiced that the new budget does not account for the previous cuts made to AISH and other disability and community supports, claiming the government has done the “bare minimum” and has failed to properly index their supports. “They haven't undone the enormous damage that they've inflicted.”
Renaud also said the UCP’s budget cannot do what the government has promised it can. “The finance minister announced that they would be building 50 new schools in this budget. If you look at the actual budget estimates, they've only got money for planning—$ 4 million for an entire province. And then they've only got $66 million for new schools in budget 2023. Now, an average school, to build a new school, is about $50 million. So that's not going to go very far.”
Nally said he was excited to see the royalty credits for the Alberta Petrochemical incentive program, noting the hydrogen industry will provide jobs to many Albertans, including those in his riding.
The investment in healthcare will be particularly impactful for the St. Albert community, Nally said.
“The billion dollars for health care, that was exciting. $1.8 billion for education. And seeing that we're opening up, more seats at universities, for nurses and doctors. That means all of the young people that are looking to get into post-secondary in those fields are going to have spaces."
Health care funds will be split, with more than $2 billion going toward the strengthening and modernization of the primary health care system, $4.3 billion toward continuing care, community care and home care, while $237 million over 3 years will go toward the Alberta Surgical Initiative capital program. $148 million will go toward mental health and addiction resources.
The capital plan for 2023 includes $6 .5 billion for municipal infrastructure; $3 .5 billion for capital maintenance and renewal; $3 .1 billion for health facilities; $2 .3 billion for roads and bridges; $1 .6 billion for schools; $1 .1 billion for agriculture and natural resources; and $3 .2 billion for other Capital Plan envelopes.
>>>>>>Municipal infrastructure funding increases
In 2022, the province contributed almost $2.5 billion in operating and capital funding to municipalities and community organizations to “support local priorities” and help offset inflationary pressures.
This support is projected to increase to $3.4 billion in 2025-26 .
This includes broad support through the Municipal Sustainability Initiative (MSI) / Local Government Fiscal Framework (LGFF) operating and capital grants, as well as targeted operating support for policing, libraries, Family and Community Social Support Services (FCSS) and grants for things like transit, water, wastewater, and affordable housing.
The MSI / LGFF fund doubled under the new budget, from $30 million to $60 million.
>>>>>>Goodbye, deficits
The new fiscal framework has been designed with a balanced budget as a requirement, ensuring “sound fiscal management for the long term.” Toews said the framework prioritizes debt repayment and saving for the future.
The UCP plans to table a bill this spring that would only allow the province to run a deficit if revenue dropped quickly and suddenly.
The province can post a deficit if the cost of a disaster is bigger than the contingency funds the province set aside, if revenue is more than $500 million lower than expected or if Alberta is involved in a legal settlement that would require a large payment.
The new framework sets out rules for using surplus cash to pay down debt as it matures. In 2022-23, $13.4 billion of maturing debt was repaid using surplus cash and $1.4 billion is expected to be repaid in 2023-24 .
The remainder of surplus is expected to be put into a new $1.4 billion “Alberta Fund,” which could be spent in the new fiscal year starting April 1.
Toews said the Alberta Fund was intended to “create discipline” with any surplus funds, with a priority of savings and debt repayment.
Surplus included in the fund could be used to pay off debt, add more funds to the Heritage Savings Trust Fund, or used toward one-off affordability payments or capital projects.
Toews acknowledged that “times remain tough” for many Albertans due to inflation. The budget includes inflation relief funding of $2.4 billion, which includes $238 million per year for post-secondary education students.
The government will also be indexing personal income taxes to inflation and fully pausing the collection of the 13-cent provincial fuel tax until June 30, 2023.
More than $820 million has been allotted for the next three years to help school boards prepare for enrolment growth. An additional $1.5 billion in learning support will be spent in 2023-24 to help children with specialized learning needs and hire up to 3,000 education staff.
Another $414 million will be spent over the next three years to reduce rural school bus ride times and provide support to drivers to offset rising training costs.
>>>>>>Debt ratio below 30 per cent
Toews pledged to keep the province’s net debt-to-GDP ratio below 30 per cent, which he achieved this year, with a debt of 10.2 per cent in 2023-24, an increase from the 9.9 per cent previously projected.
The government used $13.4 billion to pay down provincial debt in 2022-23, and is planning to pay down another $1.4 billion in 2023-24. Debt servicing costs are expected to hit $2.8 billion in 2023-24.
Taxpayer-supported debt outstanding is estimated to total $79. 7 billion at the end of 2022-23 and $78. 3 billion at the end of 2023-24.
The budget did not put aside any money for a provincial police force, but about $50 million is set aside for municipalities to “consider alternate policing options from RCMP.”
For budget coverage on the oil and gas industry see page 22.
