Finance minister touts Alberta budget on visit to the Hat

By Collin Gallant
Southern Alberta Newspapers

Finance minister Nate Horner says the new provincial budget is a sound plan to better Alberta’s financial position in the future, and business leaders appeared to agree at a lunch event in Medicine Hat on March 6.

But, municipal leaders said that less-than-requested infrastructure support in the $73-billion plan puts them in a tough position with little options but to raise taxes for revenue.

Horner addressed local business and civic leaders one week after tabling the Alberta budget that more money into health and education, but not at levels to meet population growth or inflation, critics have said.

Horner, the MLA for Drumheller Stettler, told about four dozen chamber of commerce members and attendees that he sees the plan as conservative today, with a look to the future.

“We’ve attempted to strike a balance with a population boom and some challenges,” he said, outlining provincial revenue expected to be $73.5 billion in 2024-25, about $2 billion below last year’s level due to softer oil revenue.

“We’ve really tried to prioritize health and education, and each received 4.4 per cent increases in their operating budgets,” he said, citing the general spending increase of 3.9 per cent, but weighted toward the two biggest ministries by budget size.

“When you put that much emphasis on (big portions of the budget), and still want a sustainable spending line, it means all other ministries receive less,” he said. “It’s just a fact that health is eating everybody’s cookies, but it’s something we can’t avoid.”

The government is also planning to build the Heritage Trust Fund and has not abandoned a plan for a promised tax reduction after the next budget, he says.

In terms of new borrowing, Horner said financing in the budget is being misunderstood.

The province will have to refinance a large block of debt in several years, and is staging that out over several years starting now in the interest of hedging against rate changes, he said.

As it is, the province’s debt financing costs will be $3.4 billion this year and remain relatively stable in to the mid-term, before falling. At the same time, he expects spending restraint and new revenue to bolster long-term reserves.

The Trans Mountain Pipeline expansion coming online this year should reduce price differentials that Alberta oil experiences on the world markets, providing a revenue boost for the province.

“It’s great news for the province,” he said.

Aaron Fleming, the former president of the local chamber and current president of the Alberta Chambers of Commerce, said the plan was “refreshing, in the fact that you can see where they’re going.”

“There are a few things that are very important from the chamber’s standpoint – fiscal responsibility, setting money aside – and it’s great that the government is listening to that,” said Fleming. “It’s important to remember that everyone has their own way of what they’d want to see, and there are a 100 different ways of doing things, but the government is open … ready to communicate and trying to do things clearly.”

In terms of current spending, the budget has few new major projects.

As for water, it includes $250 million toward water and wastewater infrastructure for municipalities, and well as $250 million previously promised to pay a share of irrigation expansion with districts and the federal government.

Within the budget the new Local Government Fiscal Framework will provide $724 million to towns, cities and counties – about $1 billion less than requested by Alberta municipalities when the program was designed.

“They’re making it up on the backs of municipalities,” said Redcliff Mayor Dwight Kilpatrick on Wednesday.

“We’re getting less, and have faced (inflation of) 13 and 8 per cent in back to back years. What else can we do to get infrastructure built than raise taxes?”

Redcliff’s share is about $800,000 in 2024, roughly $400,000 per year less than through MSI provided to the town of 5,000 residents.

City of Medicine Hat finance officials told Southern Alberta Newspapers they generally consider the difference at about 25 per cent per year, considering the fluctuations of the years.

The Hat will get about $8.2 million this year, then $9.5 million next, compared to $11 million under MSI in the mid-2010s.

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