News Release

November 14, 2000
Edmonton, Alberta

"Our commitment to the people of Alberta remains strong as we act on their priorities of paying down the debt and prudent fiscal management."

Provincial Treasurer Steve West

Second Quarter results show Alberta's commitment to debt elimination

Alberta is still on track to make a record debt payment of $4.5 billion while at the same time returning nearly half a billion dollars to Albertans through initiatives like energy tax refunds and personal income tax reductions. That’s the news in the Second Quarter Fiscal Update released by Provincial Treasurer Steve West.

"We are listening to Albertans," said West. "They have told us that debt repayment is their first priority and tax reductions second."

Alberta’s accumulated debt will be reduced by $2.2 billion this year and $2.3 billion will be set aside to repay additional debt as it matures in the future.

The $4.5 billion accumulated debt payment is possible because of record resource revenues. Energy revenues this year are expected to reach $8.7 billion, more than twice the level they were last year.

Higher revenues have also allowed the government to return $485 million to Albertans through tax and revenue reduction initiatives, including the $345 million energy tax refund, this year’s $30 million cost of the January 1, 2001 reduction in the school property tax and a $24 million reduction in crop insurance premiums for farmers. Albertans will save an additional $86 million through changes to Alberta’s new personal income tax plan that lowers the single rate tax from 11 to 10.5 per cent and increases personal and spousal exemptions to $12,900.

Since Budget 2000 there has been more than a billion dollars in increased spending on Albertans’ priorities. See the backgrounder for more details.

"The second quarter report reaffirms our commitment to Albertans and allows them to enjoy benefits from increased interest savings from massive debt paydown, an energy tax refund and personal income tax reductions and one-time priority spending," says West.

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Backgrounder

Up to 25 per cent of each year’s economic cushion can be used for priority spending needs and revenue reduction initiatives, according to the Fiscal Responsibility Act. Some of the higher-than-forecast revenue this year is being used to address priority areas. Program spending is now forecast to be $1 billion higher than budget.

Infrastructure spending is forecast to increase by $419 million over the budget estimate. As noted in the First Quarter Update, $411 million is for high priority new schools, school modernization, health capital projects, and the construction of a new high-tech learning centre at the Northern Alberta Institute of Technology. The province will provide $8 million as part of its $171 million commitment to the Infrastructure Canada/Alberta Program.

Health and Wellness spending is forecast to increase by $294 million over budget. As reported in the First Quarter, an additional $230 million was provided to support the implementation of the Six Point Plan for Health. The Second Quarter Update also includes increases of $15 million for contracted agencies and service providers to support employee compensation adjustments and $49 million for medical equipment.

Agriculture, Food and Rural Development spending is up by $177 million over budget. A new Farm Income Assistance package will provide $233 million to farmers and ranchers who are experiencing difficulties due to poor weather, low commodity prices and growing input costs. Crop and hail insurance indemnities are also increasing by $40 million and there is a $2 million increase in Alberta Dairy Control Board restricted expense.

These increases are partially offset by a $98 million reduction in the Farm Income Disaster Program. The reduction is due to lower than anticipated claims for the 1998 and 1999 tax years, and the positive effects of the Farm Income Assistance Program on farmers’ margins for the 2000 tax year.

Community Development

Community Development program spending is forecast to increase by $56 million from budget. As reported in the First Quarter Update, $12 million is being provided for seniors’ housing projects and rent subsidies for low-income households. $50 million was also provided for the Alberta Centennial, of which the ministry has now allocated $44 million for community legacy projects (program expense) and $6 million for related capital investment.

Children’s Services spending is forecast to increase by $46 million above the budget estimate. As reported in the First Quarter Update, $37 million will go to higher than expected caseloads in child welfare and handicapped children’s services, civil service compensation costs, and high priority recommendations of the Children’s Forum and the Children at Risk Task Force Report. An additional $9 million is for contracted agencies and service providers to support employee compensation adjustments.

Learning spending is down $7 million from budget due to lower than anticipated enrollment. As reported in the First Quarter Update, the ministry is reallocating funds to increase the number of hours of kindergarten and provide extra funding for the training of more physicians and other health professionals.

Environment spending is up $30 million from the budget. Forest fire fighting costs have risen $33 million, partly offset by decreases in dedicated revenue expenditures.

Municipal Affairs program spending is forecast to increase by $18 million from the budget. $10 million is being provided to develop and implement a property tax assessment and building permit data sharing system for use by municipalities and the ministry ($8 million program expense plus $2 million in capital investment). $10 million has also been provided for the Pine Lake Tornado Disaster Recovery Program.

Debt Servicing Costs are forecast to be $945 million, a decline of $36 million from the budget. The decrease from budget reflects the large debt payment the province is making this year. A higher foreign exchange valuation due to the weaker Canadian dollar partially offsets lower interest costs.

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