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Wednesday, August 23, 2006

Alberta reports another record surplus

Ok so we have posted similar articles to this in the past. However this is hot of the press from the Edmonton Journal and you can find this story every where in Edmonton right now. CBC ran a insightful documentary on the Alberta boom and it certainly captures the Alberta spirit. The pace of home sales will continue to be strong in the Edmonton area and this news won't make too many buyers reconsider their decisions.

Edmonton — Higher projected revenue in the current fiscal year and better-than-forecast year-end results from 2005-06 will allow the Government of Alberta to increase its investments, the province announced Wednesday.

There will be additional funding for infrastructure, health, education, and savings, it said, as part of the 2006/07 first quarter fiscal report.

"Alberta's economy is strong and vibrant, with the population growing by an estimated 90,000 people last year, the equivalent of the City of Red Deer," said Finance Minister Shirley McClellan.

That kind of growth brings added pressure on our provincial infrastructure and services, McClellan said.

“We are addressing these priorities, while making investments that will benefit future generations."

But the surplus doesn’t mean good news for everybody, said Alberta Liberal Finance critic Rick Miller.

Years of mismanaged surpluses and lack of a long-term vision have led to the struggles many Albertans are currently facing due to unprecedented growth in the province, Miller said Wednesday after McClellan’s announcement.

“Albertans want to know why this government keeps holding these fiscal updates announcing massive surpluses, when they can’t find an apartment, or they’re waiting for hours in the emergency room to see a doctor,” says Miller.

“The answer is this government is incapable of managing growth and planning for the needs of Alberta’s booming economy,” he said.

Meanwhile, the province said the $1.8 billion increase in capital funding includes $711 million for 2006/07 projects and $1.1 billion for future years.

The increase will provide funding for cost escalation of approved projects, additional school projects, health equipment, a new Edmonton Remand Centre, a province-wide policing information technology system, petroleum tank site remediation, regional water systems, and other infrastructure support, the province announced.

Significant increases have been provided for capital and operating expenses in education and health. Education funding has been increased by $293 million.

This includes $232 million for school maintenance and renewal, modular classrooms, new schools and preservation projects, and cost escalation of approved projects as well as $61 million for operating support to schools.

Health funding will rise by $262 million, including $150 million for medical equipment, $81 million for health authority operations, and $31 million for auxiliary nursing salary adjustments.

A new $200 million energy innovation fund has been established to support energy development and efficiency as well as environmental protection and sustainability.

Savings will be increased by allocating an additional $250 million to the advanced education endowment, $100 million to the science and engineering fund, and $41 million to the Heritage Fund for inflation proofing. This brings the total 2006-07 allocations for the Heritage Fund, other endowments and funds to $2.5 billion, an increase of $591 million.

Total revenue is forecast to be $1.5 billion more than budget, primarily due to higher income tax and energy revenue, the province said.

While oil prices have reached record highs, natural gas prices have been weaker than expected. Overall, resource revenue is now projected to increase by $531 million from the budget estimate.

Expense is expected to be $1.3 billion higher than budget, primarily due to funding increases for capital projects, disaster relief, and natural gas rebates.

The provincial surplus is forecast at $4.3 billion, up $193 million from the budget estimate.

The province also released the Alberta Heritage Savings Trust Fund first quarter update and the first quarter activity report with the fiscal update.

The Heritage Fund report notes investment income is expected to be $784 million, about $90 million lower than budgeted because of a decline in markets.

After additional allocations from the sustainability fund, the book value of the Heritage Fund on a consolidated basis is forecast to be $15 billion on March 31, 2007, up from $13.4 billion at the end of last fiscal year.

Miller said the government needs to develop a long-term fiscal strategy that would see surpluses dedicated to solving the long-term infrastructure needs of municipalities, increasing access for post-secondary education and increasing the value of the Heritage Fund to create a sustainable source of revenue.

“Nowhere is this government’s lack of vision more apparent than in the gaping irony of massive surpluses, while schools are crumbling and intensive care beds are being closed for lack of staff,” says Miller.

“In a province with such tremendous economic opportunity, we could be creating world class post-secondary institutions and providing citizens with the highest quality of public health care.”

He questioned the government’s priorities when Alberta municipalities are telling the government that just $20 million would help to solve the homelessness problem.

“Surely Restructuring and Government Efficiency Minister Luke Ouellete can find $20 million over 5 years to address homelessness,” he said.

First Quarter Highlights:

Capital funding increased by $1.8 billion
$200 million Energy Innovation Fund established
Additional $391 million allocated to savings
Surplus forecast at $4.3 billion

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