In the final week before school starts, it wouldn’t be surprising to find out that few people were paying attention to Alberta’s fiscal update. Personally, I had to link up during back-to-school shopping and feverish updates of my bank account balance while standing in the check out lines. Outside of my personal hell of online shopping, returns, replenishing school snack supplies, Wal-Mart, and haircuts, the world kept turning. This week, it was the Alberta Finance Minister’s fiscal update for the first quarter.
The mood was solemn. The words were deliberately dire. The numbers, however, were… not bad; but the UCP knows more than they were willing to offer analysts and economists and pundits; so, preemptively, it’s the NDP’s fault that the Q2 results will be much, much worse.
The Worst… Debt… Ever
Debt servicing costs increased by $93 million, or $31 million dollars a month. To bring that down to “real people” numbers, it would be the equivalent of having to purchase a new furnace on credit after you already had to buy a new fridge, on credit. Of course, to hear the other side tell it, it’s more like purchasing a giant flat screen T.V. after you upgraded your MacBook for no apparent reason. Wants, not needs.
Revenue is Up, and Down, and “Virtually Identical to 2018”
This requires some detail.
On the positive side, revenue from personal and corporate tax was up by $166 million in the first quarter. This means both that companies and individuals were making more money in the first quarter of 2019 than they did in 2018.
Resource revenues were also up by $164 million. This is all good news for a province that is still slowly making its way out of recession territory; it should be good news to Albertans.
Oddly enough, since the carbon tax hit the wastebasket on June 1 (third month of the quarter) and “tobacco and fuel consumption” was also down, it only resulted in $66 million dollars less in revenue.
Considering the lack of a carbon tax alone should take $145 million out of provincial revenues, per month, one has to wonder about how much tobacco and fuel consumption was going on in the province that a “decrease” only lost us $80 million when the number should have been well over the $145 million from the loss of the carbon tax. Yeah, yeah, everyone knows Albertans hate the carbon tax but additional taxes help pay for stuff you hate more, like debt servicing.
Good and Bad News
Total expenses are down by $364 million, year over year, however: operating expenses are up by $270 million. Back to the “real people” dollars, you added Netflix, rented a bunch of movies, started ordering pizza every Friday and stopped taking lunches to work. Or, you had twins. Whatever floats your boat. BUT…
Capital grants are down by $767 million. So, you stopped hiring professionals, you put off a new roof, if you hit the hot water heater in just the right place, it will turn on again, and you’ve decided to finally accept your neighbour’s offer to carpool because then you’ll only need to drive once every three weeks and do you really need winter tires if you’re only driving once every three weeks? Don’t worry, it’ll be our little secret.
However… this may not have been deliberate. The end of the fiscal year for government is March 31. Taking power in mid-April meant that some things would be deferred while the new government takes stock of the budget, the needs, and the luxuries. This spending may show up in the new budget but there’s nothing that tells us that it will, or won’t, yet.
The Short Version
That’s the information sent out by the Finance Ministry. There is nothing to go by in terms of their own projections (other than it’s going to get worse). Anyone who can do math knew that if you willingly toss out $145 million a month, and throw in some additional revenue losses by way of tax cuts, that it wasn’t going to get better.
Everyone is on the edge of their seats waiting for October because that’s when the cuts will be announced. As of today, they only sent out 50% of the requested budgets for all public services so what will happen in October? Nobody knows because, at two pages, it was the shortest and least informative fiscal update since 2012, which had nine.
This post contains a lot of fact and some opinion.
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