EDMONTON – Alberta ended its most recent fiscal year with a $10.8 billion deficit and $33.3 billion in debt, but Finance Minister Joe Ceci said Thursday the economic outlook is improving and the NDP government still plans to balance its books in six years.
The province’s year-end financial statement said the Alberta economy shrank by more than seven per cent over 2015 and 2016 as the cratering in oil prices led to tens of thousands of layoffs and sharply cut government revenues.
Ceci said the Fort McMurray wildfire, which knocked major oilsands projects offline for weeks and forced more than 80,000 from their homes for a month or more, compounded an already dire situation.
“The oil price collapse together with the Wood Buffalo wildfire reverberated throughout our economy,” he said.
But matters started to improve around the middle of last year, with indicators like oil and gas drilling activity and manufacturing picking up.
“As we close off a very difficult year, the light on the Prairies is shining a little brighter,” Ceci said.
The Fort McMurray wildfire slowed the economy by 0.6 per cent and reduced royalty and tax revenues by about $300 million. The province spent $710 million on firefighting and support during the disaster, but that was offset by $495 million it received in federal assistance.
The deficit for the 2016-17 fiscal year was in line with the government’s most recent forecasts, but $263 million higher than anticipated in the budget. Total revenues were $1 billion more than expected at $42.4 billion.
Non-renewable resource revenues were $1.7 billion higher than the budget estimate thanks in part to higher-than-expected commodity prices. For instance, West Texas Intermediate crude prices, the key U.S. benchmark, averaged US$47.93 a barrel in 2016-17, nearly $6 higher than the budget estimate.
Prices are currently around US$45 a barrel and the province is banking on a price of US$55 for the 2017-18 fiscal year.
The revenue boost was offset by lower income taxes and a $2-billion hit to government books from the Balancing Pool, an electricity-market agency that is now under the financial control of the Alberta government.
Expenses for 2016-17 were $53.2 billion, a $1.9 billion increase from what was expected in the budget, with part of the jump resulting from how the province accounted for future coal phaseout transition payments.
Thursday’s numbers were assailed by opposition parties.
“This is without question the worst year on the books in Alberta’s history and the NDP government is working twice as hard this year to try and outdo themselves,” said Wildrose Party Leader Brian Jean.
“Their tax hikes were reckless, their legislation scared billions of investment away and their dangerous levels of spending and billions wasted on failed energy experiments will be a stain on this NDP government Albertans won’t soon forget.”
Alberta Party Leader Greg Clark said the financial report shows the NDP are incapable of sticking to a budget.
“The choices they have made are hurting Alberta, setting our province up for substantial cuts in the future regardless of which party is in power. The NDP government has abandoned all responsibility for the finances and future of the province.”
— By Lauren Krugel in Calgary