August 29, 2002 Strong revenues in first quarter offset by disaster assistance Edmonton... Higher than anticipated revenues in the first quarter of the Government of Alberta’s fiscal year were offset by $879 million in emergency funding for Albertans affected by natural disasters, placing the government’s forecast for the 2002-03 economic cushion at $531 million. These highlights were part of the 2002-03 first quarter update released August 29 by Finance Minister Patricia Nelson. "The Alberta government was able to step up assistance to those Albertans affected by forest fires, floods and one of the worst droughts in the province’s history," said Nelson. "Thanks to this province’s dedication to prudent fiscal management, the government has been able to assist agricultural producers in difficult times. The drought is having a devastating impact on the industry, and on farm families. I know that Albertans agree that it was necessary for government to step up to the plate." The first quarter report also shows that total revenue is now expected to be higher than forecast in Budget 2002, but $1 billion in program spending reduced the economic cushion to $531 million. The forecast for the economic cushion is down $193 million from Budget 2002. Of the $879 million spent on disaster relief, $723 million went towards drought assistance. Additional program spending included reinstatement of some capital projects deferred in 2001-02, the new Community Initiatives Program, and a one-time contribution to the Teachers' Pension Plan. "We told Albertans that when money became available, we would restore funding to projects that had been deferred in October of 2001," said Nelson. "The government was able to restore funding to several initiatives, including ten school facility projects and honour its commitment to pay teachers' share of unfunded pension obligations for one year." The Minister of Finance provided updated natural resource estimates for this fiscal year that show the price of oil averaging $25.50 US$/barrel, up from the budget forecast of $20.00 US$/barrel, and natural gas to average $3.25 Cdn$/mcf, up 25 cents from the budget estimate. At these prices, one-dollar difference in the price of oil amounts to plus or minus $108 million, while every 10-cent fluctuation in the price of natural gas has a $137 million impact on natural resource revenues. At the same time, Nelson cautioned that a strong forecast in natural resource revenues could be offset by lower returns on investment income. The forecast for investment income was revised to $621 million in first quarter report. That’s down $563 million from the budget forecast. With the release of this first quarter report, Alberta’s accumulated debt is forecast to be $4.6 billion on March 31, 2003.
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