Newsrelease

August 31, 1998
Calgary, Alberta

"Thanks to our strong provincial economy and careful budgeting, we were able to meet the fiscal challenges that came our way in the first quarter. However, we must keep in mind that volatile resource revenues and an uncertain global economy mean that we will continue to face budgeting challenges throughout the year."

First quarter forecast shows revenues up thanks to strong economy

Financial results for the first quarter of 1998-99 released today show that provincial revenues are expected to be $622 million higher than forecast, while spending is expected to be up by $514 million.

"The first quarter highlights this government’s ability to maintain a balanced budget despite volatile resource revenues and spending needs that couldn’t have been anticipated. We’re staying the course, budgeting prudently, and making sure that spending is targeted to priority areas," said Provincial Treasurer Stockwell Day.

Highlights of the first quarter report are:

• A surplus of $277 million is forecast for 1998-99, that’s up $112 million from the budget estimate.
• Total revenue is expected to be $622 million higher than forecast in the budget, thanks largely to higher personal and corporate income tax revenues.
• Investment income from the Alberta Heritage Savings Trust Fund is expected to be up by $90 million.
• Program spending is up $447 million, reflecting previously announced funding for health and infrastructure initiatives, and increased costs for fighting forest fires and for agriculture assistance.
• Debt servicing costs are forecast to exceed the budget estimate by $67 million due to the lower Canadian dollar.
• Total consolidated expense is expected to be $514 million higher than the budget estimate.
• The revenue cushion of $420 million is maintained in the forecast.

"This government has worked hard to get the province in the fiscal shape it’s in today, and that hard work has paid off. Our first quarter forecast is proof that we can effectively guide the budgeting process, whether oil is at $26 a barrel or $13 a barrel," Day said. "We have diversified, and you can see that clearly today if you look at the growth in corporate and personal income tax revenues." The Provincial Treasurer stressed that it is much more difficult to stay the fiscal course in the current climate than it has been in recent years. "Alberta is no longer reaping the benefits of high oil prices and looking at two billion dollar surpluses. We must value, more than ever, the conservative budgeting process and keep expenditures in line with revenues."

Attachments

Note: After viewing any table, press your "back" button to return to the document.

Click here for graphic - "Diversification in Alberta - Corporate Income Tax Paid by Industry"

Click here for graphic - "Diversification in Alberta - GDP by Industry"

Click here for graphic - "Oil Prices"

Click here for graphic - "NYMEX Gas Price"

Click here for graphic - "Alberta Personal Income Tax"

Click here for graphic - "Alberta Corporate Income Tax"

Click here for graphic - "Bank Rate"

Click here for graphic - "Lottery Fund Revenue"

For further information, please contact:

Shannon Taylor
A/Director of Communications
Alberta Treasury
(780) 427-5364
taylosha@treas.gov.ab.ca

or

Hal Danchilla
Special Advisor to the Provincial Treasurer
Alberta Treasury
(780) 427-8809