Budget 2019: Albertans to pay more as United Conservative government reins in spending

Alberta will cut public sector jobs, end the cap on post-secondary tuition, chop municipal funding and delay infrastructure projects, all with the aim of returning to a balanced budget by 2023.

The budget — the first under the province’s new United Conservative Party government — forecasts a return to a modest surplus of $584 million in the 2022-23 fiscal year. 

“It has been decades in this province since we’ve actually seen a budget that has resulted in a reduction in operation spending,” Finance Minister Travis Toews told reporters during a news conference Thursday. 

Toews said the government will make additional cuts if global conditions change or Alberta isn’t able to access new pipelines. 

“We’re committed to balancing the budget in four years,” he said. “But should circumstances change, we will adjust accordingly.” 

Alberta ended the 2018-19 financial year with a deficit of $6.7 billion. The debt is forecast to increase to $71.8 billion this year. 

The higher $8.7 billion deficit forecast for 2019-20 is mostly due to the cancellation of the crude-by-rail contracts put in place by the previous government. The budget estimates the costs of transferring rail contracts to the private sector at $1.5 billion.

The government intends to cut the size of the nearly 28,000-member public service by 7.7 per cent by 2023. 

Job losses this year — achieved mostly through not replacing people who quit or retire — will be 764 full-time equivalents.

The aim is to reduce spending on public service salaries by 2.1 per cent by 2022-23.  Toews said there will be no room for wage increases in the budget in the next three years.

People who smoke will pay an additional $5 for a carton of cigarettes as of midnight. Fees for land titles and motor vehicles will also increase. For example, the cost of registering a vehicle will go from $75 to $80. The application fee for the Alberta Immigrant Nominee program is set at $500. It was previously free. 

Advanced Education will see a five per cent budget cut and the government will end the five-year freeze on tuition, with increases limited to an annual maximum of seven per cent a year or 21 per cent over three years. 

Students will also pay more for their student loans. Interest is currently set at prime but the government is changing the rate to prime plus one per cent.  The province is also ending education tax credits. 

Post-secondary institutions will also have their operating grants cut by up to 7.9 per cent. The amounts will be based on each institution’s financial capacity and will be revealed later Thursday.

Municipalities take a hit

Millions will be spent to support people who choose to take training in trades. 

People who receive social assistance programs like the Assured Income for the Severely Handicapped and Income Support will no longer have their payments indexed to the Consumer Price Index, which will save $10 million this year.

Municipalities will take a sizeable hit to the funding they receive to pay for infrastructure. The Municipal Sustainability Initiative, or MSI, will be cut by $94 million in 2020-21 and $142 million in 2021-22.

In the 2018-19 NDP budget, MSI was pegged at $694 million, meaning it will come down to $600 million in 2020-21. In 2021-22, that figure will drop from $667.2 million to $535.2 million. 

The province will also cut the grants it provides in lieu of taxes for municipal buildings. 

Edmonton, which as the provincial capital has the most government buildings, will see a $15.3 million cut in 2020-21. Calgary, by comparison, will only see a $5 million reduction.

Calgary, Edmonton city charters repealed

The government also intends to repeal the city charters for Edmonton and Calgary, opting for a new program that will apply to all municipalities starting in 2022-23. Alberta’s two largest cities would see their base spending reduced by $45 million a year. 

A couple of major projects have been cancelled or delayed. The new southwest Edmonton hospital, which was supposed to be completed by 2027, won’t be finished until 2030.

The government will also chop the new $122-million Provincial Operations Centre but will maintain the $3 billion committed for LRT in Edmonton and Calgary.

The majority of provincial funds will however come after 2022-23. 

Despite the cuts, the government will spend $30 million on the new Canadian Energy Centre, otherwise known as the energy war room, and $2.5 million on the public inquiry examining foreign sources of funding for opponents of Alberta oil and gas. 

The government will increase funding in some areas, spending an additional $100 million on mental health, $40 million to fight opioid addictions and $20 million on palliative care. 

The government will fund this year’s 2.2 per-cent increase in education enrolment, but said it is working on a new funding framework in time for the 2020/21 school year.

Alberta plans to build or retrofit 25 schools over the next four years. 

The province plans to combine the Alberta Child Benefit and the Alberta Family Employment Tax Credit into a single Alberta Child and Family Benefit.

Overall government expenses will stay at about $50 billion for the next two years. They are targeted to increase to $53 billion in 2021-22 and $57.5 billion in 2022-23.

The government is forecasting the price of a barrel of West Texas Intermediate to range from $57 US this year to $63 by 2022-23. 

The government started a phased reduction of the corporate tax which will take the rate from 12 to eight per cent by 2022. Toews said the tax cut will incentivize business to set up in Alberta, and will increase revenues by $4 billion by the end of 2023.

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