UPDATED: Alberta government forecasts $4.6 billion budget surplus for end of 2024-2025

The Alberta government said in its second quarter fiscal update it has maintained a balanced budget while ensuring pressures from population growth are being met. For the end of 2024-2025, the Alberta government forecasted a $4.6 billion surplus — up from the $2.9 billion in the first quarter forecast and $367 million from Budget 2024. This is mainly due to higher revenue from personal income taxes and non-renewable resources. “These are challenging times, but I believe Alberta is up to the challenge,” said Alberta Treasury Board President and Finance Minister Nate Horner in a Thursday press release.“By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.” Right now, the Alberta government said the province faces risks, including ongoing resource volatility, geopolitical instability, and increasing pressures at home. With more than 450,000 people moving to Alberta in the last three years, it said it has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported.Given the current significant uncertainty in global geopolitics and energy markets, the Alberta government said it must continue to make prudent choices to meet its responsibilities. This includes ongoing bargaining for thousands of public sector workers, speeding up school construction, cutting personal income taxes, and ensuring the surging population has access to optimal healthcare, education and other public services.Midway through 2024-2025, the Alberta government said it has stepped up to boost supports to Albertans this fiscal year through various expenditures. It confirmed it has spent $716 million on Alberta Health for physician compensation incentives and to help Alberta Health Services provide services to a growing, aging population. Moreover, it said it has allocated $125 million to address enrollment growth pressures in Alberta schools. It has spent $847 million for disaster and emergency assistance. This includes $647 million to fight the Jasper wildfires, $163 million for the Wildfire Disaster Recovery Program, $5 million to support the Municipality of Jasper, $12 million to match donations to the Canadian Red Cross, and $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires. To support social support programs, it has given $240 million more to Alberta Seniors, Community, and Social Services. Looking forward, the Alberta government said it has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. Meanwhile, it said it risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.After a 4.4% surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5% in 2025 — lower than the first quarter forecast of 3.2% because of reduced immigration and non-permanent resident targets by the Canadian government.The Alberta government said revenue for 2024-2025 will be at $77.9 billion — an increase of $4.4 billion from Budget 2024. At the moment, it forecasted $16.6 billion from personal income taxes — up from $15.6 billion at budget. It said $20.3 billion will come from non-renewable resource revenue — up from $17.3 billion at it. Expenses for 2024-2025 have been forecast at $73.3 billion — an increase of $143 million at it. After calculations and adjustments, $2.9 billion in surplus cash will exist. Half of that surplus will go towards paying down $1.4 billion in debt coming due. For the other half, it will see $1.4 billion put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund (AHSTF), or spent on one-time initiatives.Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion has been forecast. The AHSTF grew in the second quarter to a market value of $24.3 billion as of September — up from $23.4 billion at the end of the first quarter. It earned a 3.7% return from July to September, with a net investment income of $616 million — up from the 2.1% return during the first quarter.The Alberta government concluded by forecasting taxpayer-supported debt at $84 billion as of March — $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements. It said debt servicing costs will be $3.2 billion — down $216 million from budget. Horner followed up by saying the assumptions around the surplus are built around oil prices. “We still have it at 74 because year-to-date it’s around 76.50,” he said. “We’re assuming if oil stays relatively where it’s at, I think it’s just under 70 to date, if it tracks around 68 or 69 to the end of the fiscal year, that will land us at $74.” Obviously, he said there other changes such as non-cash adjustments, the timing of royalties, and changes to income taxes received. While the $4.6 billion surplus is the best guess for now, he acknowledged the Alberta government is taking into consideration a softening during the rest of the year. Alberta NDP MLA Court Ellingson (Calgary-Foothills) responded by saying for the first time in a generation, Premier Danielle Smith has made the province more dependent on oil and gas than before. “And as we all know, we can’t always rely on the price of oil,” said Ellingson. “When the price of oil goes down, which it will, there are real concerns about that.” At this time, Ellingson said there are no tangible solutions in the fiscal update to address concerns of average Albertans. This is because there is no significant spending in healthcare and education. The Alberta government said in February Budget 2024 is a responsible plan to address priorities it has, but it will increase spending by $5.2 billion from Budget 2023..ALBERTA BUDGET 2024: Government plans to run a $367 million surplus with its $73.5 billion budget.Additionally, it predicted a $367 million surplus with its $73.5 billion budget, which is $2.1 billion lower than the third quarter forecast for 2023/2024. Budget 2023 cost $68.3 billion.“Alberta is growing,” said Horner.

UPDATED: Alberta government forecasts $4.6 billion budget surplus for end of 2024-2025

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