February 26, 2003 $1.8-billion surplus to be invested in Albertans' priorities Capital projects, debt payment, and seed money for sustainability fund, Nelson reports in third-quarter fiscal update Highlights of third-quarter report:
Edmonton... A higher-than-expected provincial surplus for the 2002-03 fiscal year will be applied to address critical infrastructure needs, further debt reduction and to kick-start Alberta's new sustainability fund. The 2002-03 economic cushion, estimated at $1.8 billion, was announced by Finance Minister Patricia Nelson as part of her third-quarter report to Albertans on February 26. "Every dollar of this surplus will be dedicated to priority areas for Albertans, beginning with a major new investment of $910 million to address pressing infrastructure needs in the province," said Premier Ralph Klein. "Albertans need new infrastructure to accommodate the dramatic growth the province is experiencing." Of the $1.8-billion surplus, $910 million will go directly into the capital account. The capital account is part of the government's overall capital plan that will be included in the upcoming provincial budget. The remainder will be divided between debt pay down of $500 million and seed money for the new Alberta sustainability fund. These allocations are based on the principles of the new fiscal framework legislated in the Financial Statutes Amendment Act. Eliminating the province's remaining accumulated debt remains a priority for the Alberta government, Nelson stressed. "We're committing half a billion dollars of this cushion to the debt," Nelson said. "We've come a long way in making Alberta debt-free, work which has already freed up $1.2 billion in savings annually that goes right back into priority program areas." Nelson also stressed the importance of setting up the new sustainability fund as quickly as possible. "The volatility of resource revenue has produced an improved forecast for this fiscal year, but we can't rely on these upward swings to offset the impact of disasters and decreased revenue in other areas," said Nelson. "It's time to bring some predictability to the government revenue picture and get off the energy roller coaster. The sustainability fund will do just that." Because of the time delay in the receipt of natural gas royalties, some of the cash from the economic cushion will not be received until 2003-04. This cash will be transferred to the sustainability fund. Positive third quarter forecasts for resource revenue and income taxes helped offset lower than budgeted federal transfers, weak investment income and the continued cost of disaster assistance. Alberta's strong economic growth and low unemployment has increased the income tax forecast by $1 billion from the budget forecast and the forecast for non-renewable resource revenue is up $2.7 billion from budget estimates. Natural gas prices are now expected to average $4.65 Cdn per thousand cubic feet, up $1.65 from budget. Oil prices are anticipated to average $28.86 US per barrel, $8.86 higher than budgeted. "Establishing a capital account and sustainability fund is part of our overall fiscal plan," said Nelson. "These initiatives address Albertans' concerns about funding for infrastructure and transportation and stabilize funding for other priorities like health and education."
Backgrounder - Alberta's Debt Reduction to date
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