Alberta's Budget 2024: A balancing act of fiscal restraint and growth amidst resource revenue volatility

With the release of last week’s Budget 2024: A Responsible Plan for a Growing Province, the Government of Alberta claims to be setting a trajectory to get itself off the proverbial “revenue rollercoaster.” Non-renewable resource revenue (read: oil and gas) dictates the fiscal fortunes of Alberta’s government, which is projected to generate $17.2 billion this fiscal year. Personal tax revenue is projected to be the second largest source of revenue at $15.6 billion, and corporate tax revenue is expected to be $7 billion. As the largest source of revenue, the price of oil can make or break a budget. In this case, the Government of Alberta is expected to post a razor-thin surplus of $367 million.

Budget 2024 focuses on addressing three main challenges: fiscal restraint, paying down the debt, and preparing for natural disasters like forest fires and drought. With oil prices remaining well above recent historic lows, the province is in a position to maintain capital investments in education and critical infrastructure, as well as finance the complete overhaul of Alberta’s healthcare system announced late last year. Some progress is being made to lower the debt; however, debt servicing payments will total $3.4 billion this year, with a total debt of $78.4 billion remaining. On Feb. 21, Premier Smith delivered a rare provincial address outlining her commitment to reshape Alberta’s fiscal framework, but there is little evidence of that in this budget.

The 2023 wildfires caused the province to declare a state of emergency at the outset of the provincial election. Complicating this year is the very likely double whammy of droughts and wildfires. To say the province is nervous about what is in store for Albertans this spring is an understatement. Billions have been set aside to build up water management infrastructure and wildfire emergency response.

There are a number of things missing from this budget, and the most damning might be the omission of the tax cut promised to Albertans in the last election. In 2023, the United Conservatives promised a 20 per cent tax cut on income under $60,000. According to the Alberta government, this tax cut is now delayed to 2027—right before the next election. Through this delay and some other accounting tricks, new government spending will likely rise by $2 billion this year alone.

Overall, the budget takes a “middle of the road” approach by avoiding drastic cuts and lavish spending on pet projects. With no election on the horizon and an NDP opposition in the midst of a leadership race, a middle-of-the-road approach just might work for Alberta’s government.

Budget snapshots

Government finances

• In 2024-25, total revenue is estimated to be $73.5 billion, which is $2.1 billion lower than the third-quarter forecast for 2023-24
• Revenue from personal income taxes is estimated to increase to $15.6 billion in 2024-25, up from $365 million from last year’s third-quarter forecast
• Corporate income tax is estimated at $7 billion in 2024-25, down $176 million from the third-quarter forecast for 2023-24, but rising over the next two years
• Total expense in 2024-25 is $73.2 billion, a 3.9 per cent increase from the forecast for 2023-24
• Total operating expense in 2024-25 is $60.1 billion, a 3.9 per cent increase from the forecast for 2023-24
• A contingency of $2 billion will help the province respond to disasters and emergencies, along with other in-year expense pressures. This is a $500 million increase from 2023-24
• The province is retaining more than $1 billion in investment earnings from 2023-24 in the Alberta Heritage Savings Trust Fund. Alberta’s government will also deposit $2 billion from the Alberta Fund, increasing the value of the Heritage Savings Trust Fund to a forecast of $25 billion

Healthcare

• The Ministry of Health has an operating budget of $26.2 billion, up from $1.1 billion from the 2023-24 forecast
• $475 million to support the continued implementation of the Modernizing Alberta’s Primary Care System, including: $200 million over two years to improve access to family physicians; $10 million for primary healthcare initiatives in Indigenous communities; $15 million to further develop a compensation model for nurse practitioners
• $1 billion over three years to transform the continuing care system in response to Facility-Based Continuing Care Review
• $5.5 billion total expense to continue building the Alberta Recovery Model and ensure Albertans suffering from addiction or mental health challenges have an opportunity to pursue recovery
• $3.6 billion over three years in capital funding to maintain or expand healthcare facilities throughout the province
• $2 billion per year for Drugs and Supplemental Health benefit programs
• $6.6 billion for physician compensation, with $129 million allocated to physicians who practise full time in underserved areas and $12 million allocated to the Rural Remote Northern Program

Education

• $1.9 billion in capital funding over three years for planning, design, or construction of new and modernized school projects across the province
• $842 million in new operating funding – bringing the total funding to more than $1.2 billion over three years – to support enrolment growth and hire more than 3,100 education staff
• More than $1.5 billion operating expense funding for educational learning supports for vulnerable students, children with specialized learning needs and other students requiring additional supports

Social services and housing

• $1.5 billion for child-care services, a 15.9 per cent increase, to create more child-care spaces and lower fees for parents and support service providers
• $717 million in capital grants over three years to advance Alberta’s Affordable Housing Strategy and increase availability to affordable housing
• An increase of $24.5 million in 2024-24 and $70 million over three years to add new homeless shelter spaces through the Homelessness Task Force Action Plan and support operational cost pressures at shelters
• $151 million in operating expenses for Seniors, Community and Social Services
• $2.9 billion for the Assured Income for the Severely Handicapped (AISH) program, the Alberta Seniors Benefit and Income Support programs to cover indexing for inflation and caseload changes

Infrastructure and transportation

• $25 billion over three years in capital funding to support Alberta’s growing communities in public infrastructure and investment in jobs, including 24,000 direct jobs and 14,000 indirect jobs across the province
• $810 million to advance the redevelopment and expansion of the Red Deer Regional Hospital Centre
• $163 million to complete the Springbank off-stream reservoir to provide protection from future flooding
• $667 million over three years for Calgary LRT projects
• $524 million over three years for Deerfoot Trail upgrades in Calgary
• $887 million over three years for Edmonton LRT projects
• $145 million for Yellowhead Trail upgrades in Edmonton
• $20 million over three years, including $17 million in new funding, to continue planning for Edmonton’s Stollery Children’s Hospital

Disaster planning and mitigation

• $251 million in capital funding over three years for flood and drought mitigations
• $418 million in capital funding over three years to expand water supply and storage infrastructure
• $151 million in operating expenses to enhance wildfire response, readiness, planning and operations
• $539 million in capital funding over three years to support water and wastewater projects across the province

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