With the first quarter fiscal update, the Alberta Government is deciding to dip into the reserve fund to hold the deficit steady at $10.5 million.
This means $250 million of the $500 million that was budgeted for risk adjustment will be used to address revenue shortfalls. The largest hit was in oil. When the Alberta government created the budget, predictions were that oil would average out at $55 per barrel. However, oil is hovering around $49 and not looking to rise in the near future.
Finance Minister Joe Ceci says he’s not worried about using half of the reserves only a quarter of the way in.
“The risk adjustment monies is being used as we intended it to be used, we’re prudently using only half of that now and we’re going to keep an eye on this.”
“I’m confident we can manage what we said we were going to mange in Budget 2017 with the levers we’ve already put in place,” says Ceci.
“For the time being we’re going to keep delivering the programs and services Albertans need and rely on and for the time being we’re going to keep up the pressure on finding … savings because those are some of the things we can control. The things we can’t control are world price of oil,” he adds.
However, the province does expect revenues to rebound.
“They’re lagging for sure and as the economy strengthens and gains more momentum, we anticipate seeing those numbers come back,” says Ceci.
The savings targets were also adjusted, they are now double the initial goal, bringing it up to $400 million. Ceci says the work for this has already begun.
“A couple of months ago we gave instruction to all ministries to start to look at ways to be more efficient, to reduce expenditures where they haven’t reduced them. We still have more work to do.”
He goes on to provide examples such as the consolidation of the Public Agency Bureau, travel restraint and a hiring restraint.
The government is remaining positive despite the fall in revenues. The economy is now forecasted to grow by 3.1% in 2017, up from the budget forecast of 2.6%. Alberta also added 17, 000 jobs and employment is expected to grow by 1.3% in 2017, up from the 0.9% projected initially.
The first quarter covers the period from April 1 to June 30.