Alberta forecasts paper surplus of $2.9B amid continued borrowing, population growth
The surplus is built on higher than anticipated oil prices, steady spending, and increased tax revenue from Alberta's growing population
Alberta's surplus is projected to rise to $2.9 billion, driven by higher-than-expected oil prices and ongoing borrowing.
The surplus estimate for the 2024-25 fiscal year is $2.6 billion more than the modest $367 million forecasted in last February’s budget.
However, the $2.9 billion figure does not represent cash readily available to the government, which is also expected to incur $600 million in new borrowing.
Finance Minister Nate Horner noted that while Alberta’s population growth, anticipated to be 4.6 percent in 2024, boosts tax revenue, it also places additional strain on government programs and infrastructure.
“While this population growth is creating challenges and putting pressure on our hospitals, schools, and other services, our prudence and discipline are helping to manage these challenges,” Horner said in a news release.
The 4.6 percent growth translates to about 200,000 new residents and is the highest year-over-year increase since 1981.
The government highlighted that this population increase is contributing to pressure on public services, ongoing collective bargaining, and potential costs associated with future wildfires, droughts, and emergencies.
Additionally, the influx of new residents is contributing to a rise in the province’s unemployment rate due to “imbalances in the labor market,” according to department officials.
Total government revenue is projected to reach $76.2 billion, up $2.7 billion from the previous budget. This includes a $458 million increase in personal income tax revenue and a $55 million rise in corporate income tax revenue.
Oil prices have also exceeded expectations, with West Texas Intermediate (WTI) averaging US $81 per barrel from April 1 to July 31. The forecast for 2024-25 oil prices has been adjusted to US $76.50 per barrel, an increase of $2.50 from the previous estimate.
The anticipated surplus increase is expected to lower debt-servicing costs by $181 million compared to February’s projections, bringing them to $3.2 billion.
Government expenditures have increased slightly, by $101 million, reaching $73.3 billion.
Taxpayer-supported debt is projected to be $86.1 billion by the end of this fiscal year in March, which is $1.7 billion less than previously estimated.
The province has allocated $573 million from its $2 billion contingency fund for disaster and emergency relief, leaving $1.4 billion remaining.
