Alberta 2024 budget preview: Small surplus expected to account for moderate oil prices, cost of climate change
Thursday's budget may also include a final cost for the government's buyout of Dynalife, after the private provider failed to meet performance targets and prompting the government to turn back to the public system for lab services
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Thursday is budget day in Alberta, with the government expected to table a narrow surplus that accounts for moderate oil prices, the need for spending restraint, and major costs looming in the coming months.
Finance Minister Nate Horner will reveal the details of Budget 2024 on the afternoon of Feb. 29, a day after MLAs return to Edmonton for the continuation of the first session of the 31st legislature.
Premier Danielle Smith pre-empted some of the budget day suspense last week in a televised address where she said the government will not be unveiling its personal income tax cut, as promised by the United Conservative Party in last spring’s election campaign, citing lower resources revenues as the need for having to show restraint.
“Lower resource revenues will certainly require us to show more restraint than previously predicted,” she said.
Smith has also recently noted her government’s pledge to not run a deficit, something that will influence much of what is presented on Thursday.
Her government will also have to reckon with growing inflation and population, both of which have increased by about four per cent in the past 12 months, according to Statistics Canada data.
Here’s some of what else to watch for in Alberta’s 2024 budget.
Deficit, debt, and surplus
Alberta rode on the back of high oil prices to overcome a nearly $17-billion deficit almost overnight, with the province recording surpluses in its most recent two budgets.
As recently as in last November’s fiscal update, the government forecast a surplus in excess of $5 billion in part due to increases in personal and corporate income tax revenue, and $1.8 billion more in bitumen royalties than expected.
The province pulled in more than $25 billion in resource revenues in 2022-23, accounting for one-third of its overall revenue, the highest proportion since 2005-06.
Oil price estimate
The price of oil remains one of the strongest determining factors in how an Alberta budget shapes up.
The government estimated a price of West Texas Intermediate (WTI) to sell for US$79 per barrel on average in both last year’s budget and last November’s fiscal update.
Early Tuesday, the price of WTI was hovering around the US$77 mark, a small difference from the projection, though one that can have hundreds of millions of dollars worth of impact on the province’s bottom line.
Climate change costs
Amid a relatively warm winter, Alberta is preparing to face what could be a hot, dry summer, with the government already speaking to the challenges of dealing with wildfires and drought.
In November’s fiscal update, the province estimated the cost of last spring and summer’s wildfire season — the worst on record — at just under $1.2 billion, with Horner adding he expected a request to increase that budget this fiscal year.
Concerns over drought may also draw spending, with the province already encouraging water-sharing ahead of the warmer months.
Health care spending
Health care spending will again be the biggest line item in Thursday’s budget, though it’s unclear if costs associated with the province’s ongoing restructuring of the health care system will be included.
Health Minister Adriana LaGrange could not specify a final cost when the overhaul was announced, but the government noted $15 million had been set aside in the current fiscal year to begin the process.
Documents leaked to the Opposition NDP cited $85 million in costs, though that figure has not yet been confirmed.
Dynalife buyout
The government may finally reveal the cost of the de-privatization of lab services from Dynalife to Alberta Precision Labs (APL), which was announced last August.
The final price tag will include the costs of the infrastructure itself, transitioning staff, and also the costs of providing additional services when APL staff were called on to help offer more lab appointments after Dynalife failed to meet its performance targets.
Horner said then he hoped to have the final cost by late November, but at the Nov. 30 fiscal update said he did not yet know the final number.
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