Government officials predicted Tuesday that five times as many bitumen royalties would go into provincial coffers compared to their budget forecasts last February. Bitumen royalties now account for 70 percent of all non-renewable resource revenue in the province, which officials say is the highest proportion on record.
This non-renewable resource income, combined with more tax revenues, federal government transfers and investment income than expected, will reduce the projected deficit this year to $ 5.8 billion, which is significantly lower than the projected deficit of $ 18.2 billion for 2021-2022.
The government’s projected revenues are up nearly 25%, with the province forecasting revenues of nearly $ 58 billion by the end of the year in March 2022.
An unexpected $ 1.4 billion disaster recovery spending to help drought-besieged farmers pushes total spending this year to $ 63.7 billion, according to the government’s second-quarter budget update.
That leaves the province on track to have $ 101.6 billion in debt by the end of the year, about $ 9 billion less than the finance ministry originally forecast.
The last tax update was released on August 30.
Although the government expects to levy more corporate income taxes than initially forecast, the $ 2.9 billion forecasted revenue this year is still lower than the $ 4.1 billion it reported in 2019-2020, before reducing the province’s corporate tax rate to 8% from 12%.
Corporate taxes are not expected to return to 2019 levels until 2023, according to government forecasts.
Yet Alberta’s finance minister insists that the government’s signature policy of low corporate taxes is having a positive influence.
“We are seeing billions of dollars in new investment and capital being deployed in the province, and it is happening in hydrogen, technology, aerospace, petrochemicals and many other areas,” said Finance Minister Travis Toews in a press release.
The most recent budget update does not contain a plan to balance the budget, a fundamental promise of the United Conservative Party in the 2019 election.
At the press conference on Tuesday, Toews said the government plans to restore a timeline and path to balance the budget after the COVID-19 pandemic.
The update projects a shortfall of $ 2.3 billion in 2023.
Officials could not say on Tuesday when Alberta would no longer depend on volatile oil prices to balance the budget.