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Insights and Analysis

Alberta Budget in the Black, Big Time

Yesterday, Finance Minister Horner announced the final update for the 2023-24 fiscal year (ending March 31, 2024) and revealed the Alberta Government had recorded a $4.3 billion surplus. 

In the past, surpluses would come and go based on international commodity prices, but this surplus is a bit different. The price of oil finished at $77.83 per barrel in 2023-24, below the US$79 per barrel forecast in Budget 2023. Expenses in 2023-24 were $70.4 billion, $2.2 billion more than estimated in Budget 2023. If the price of oil was below budget and expenses were higher then where did the surplus come from?
 
The UCP has argued an increase in corporate taxes would reduce revenue and a low tax environment would increase revenue. The 2023-24 surplus helps support their argument. Alberta has the lowest corporate income tax rate in the country, yet collected $7 billion in revenue from that tax, $1.1 billion higher than budgeted. Alberta also has the lowest personal income tax rate in the country, and yet collected a record high of $15.2 billion, $1.1 billion higher than budgeted.
 
The fiscal framework (aka “the fiscal guardrails”) were put in place to correct and remind government of their responsibility with public finances and that future planning comes with the unavoidable peaks and valleys of international commodity prices.

The fiscal framework requires surplus cash go to repay maturing debt, invested in the Alberta Fund, or one-time initiatives that do not permanently increase government spending in future years. The three allowable uses of cash from the Alberta Fund are to:

  1. Further debt repayment,
  2. Saving in the Alberta Heritage Savings Trust Fund, or
  3. One-time initiatives that do not permanently increase government spending.

Some will say, if these are the policies of government, then change the policies. The point of fiscal guardrails is to maintain disciplined fiscal prudence. The cost of living in Alberta has increased and some will not see any direct connection to their own personal finances. Public comments have already started by groups demanding fiscal relief from the provincial government to address the higher costs of living in Alberta.

Clearly, the final numbers for the 2023/24 fiscal year demonstrate, once again, that managing Alberta’s finances is a difficult and complicated task.

Related Links:

Alberta Fiscal update and economic statement

We’re Here to Help

For more information and insights about what these developments mean for Alberta’s political landscape, please contact:

Richard Feehan – Senior Strategy Advisor
feehan@prairieskystrategy.ca
780.940.8956

Rick Fraser – Senior Strategy Advisor
rick@prairieskystrategy.ca
403.701.7584

Whitney Issik – Senior Strategy Advisor
whitney@prairieskystrategy.ca
403.815.2582

Colleen Potter – Senior Strategy Advisor
colleen@prairieskystrategy.ca
587.500.2336

Mat Steppan – Senior Strategy Advisor
mat@prairieskystrategy.ca
780.236.1543

Jeff Sterzuk – President
jeff@prairieskystrategy.ca
403.612.1724

Ben Thibault – Senior Strategy Advisor
ben@prairieskystrategy.ca
587.897.6261

Richard Truscott – Vice-President
richard@prairieskystrategy.ca
403.998.0494

To learn more about Prairie Sky Strategy, please visit our website.

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