The Alberta Government tabled their Q1 update for the province’s budget on Aug. 31, and among the updates was the reporting of how much municipalities would be receiving during the next budget cycle.
Calgary, under the Local Government Fiscal Framework Act which takes effect next year, will be receiving $224 million in capital grants for the 2024-2025 fiscal year.
According to the update, that amount is expected to rise to $255 million in capital grants for the 2025-26 fiscal year.
The total capital funding available to all municipalities in the province was set at $722 million.
The province was required under the act to post the amount that municipalities would receive by September 30.
Alberta economy remains strong says government
During the update, Alberta’s Minister of Finance Nate Horner, boasted that the Alberta economy has remained strong despite fluctuations in oil and gas prices.
The province posted a $94 million increase in the surplus projections over the initial budget, from $2.35 billion to $2.44 billion.
“This comes even as we saw lower WTI prices earlier in the year. And as we’ve continued to experience the volatility that we’ve become so accustomed to over the years,” said Minister Horner.
“Our positive numbers today are a testament to the resilience we continue to build in the province’s finances, and in Alberta’s economy as we retain our position as the economic engine of Canada.”
Minister Horner cautioned Albertans on the size of the surplus relative to the overall budget of $71 billion dollars, saying that it was reflective of the sensitivities in the marketplace around natural resource pricing.
“I would just say I don’t think it’s a large surplus honestly… obviously relatively, it’s a very large number, but I would just remind everyone about those sensitivities.”
He said that for Albertans who may be looking at that surplus, and at their own financial situations, they should take comfort in the government’s plan to use part of the surplus to pay down government debt.
“I know the consumer debt levels are high in this province, but I don’t think we can help anything by continuing to borrow more to increase rates as a government either,” Minister Horner said.
“So, I hope people take comfort in that knowing that we’re we’re going to do everything we can to pay down debt in the good years, and I think this is a reasonably good year.”
Revenue jump driven by increases in corporate and personal taxes
Minister Horner said that the provincial revenue increases, leading to the greater surplus, were caused by a $491 million increase in the amount of personal and corporate taxes collected by the province.
“Our strong population growth and a low-cost, low tax, business-friendly environment are driving a projected $1.5 billion income tax revenue increase,” he said.
The province is projecting that approximately $597 million of that increase will come from personal taxes and $889 million from corporate taxes.
He said that the increase in personal income taxes is a direct result of increased population numbers in the province.
“We have population growth pegged at 4.4 per cent as of right now. That’s a that’s a very, very high number. I know our economists, within the department, have a hard time believing it, but we’re seeing strong—not only immigration—but inter-provincial migration.”
He said that a large component of that increase has been Ukrainian evacuees to Alberta, alongside non-permanent residents, and that the government expects that number to substantially decrease to around 2.3 per cent next year.
“We’ll have to watch that number and see how see how many of those people truly want to stay in Alberta long term, and how that’ll impact, how it affects volume-based programming and services in the province,” Horner said.
The minister praised the government’s tax policy for boosting corporate tax revenue increases.
“It’s worth pointing out that we’re achieving that number with the lowest corporate income tax rate in the country by a wide margin,” he said.
The province’s continued moratorium on fuel taxes led to a $532 million decrease in taxes collected by the province, with the province forecasting just $237 million collected this year versus the budgeted $769 million.
“That’s money that’s going directly back into the pockets of Albertans every time they fill up their vehicle,” said Minister Horner.
Bitumen royalty projections increased by $515 million from the 2023-24 budget, while crude oil royalties decreased by $78 million, and natural gas royalties by $1.165 billion.
“The wildfires did impact natural gas production in the north. I don’t have a number on that specifically, but it did impact us overall.”
Alberta NDP pan Q1 update
The Official Opposition NDP wasn’t as rosy on the first quarter fiscal update.
Finance Critic Samir Kayande said the UCP can’t be trusted to manage the economy or be honest with Albertans.
“The government wants to take credit for a budget picture that didn’t really get better, despite good tailwinds from oil prices going up and the Canadian dollar weakening,” said Kayande, in a media release.
“Today’s announcement wasn’t just about what was in the first-quarter update, it was also about what was missing from the update. It’s about what the UCP isn’t telling Albertans.”
He said a lack of transparency around the Dynalife contract and the overall mismanagement of the Alberta healthcare system isn’t reflected in this update.
“They have botched this process from beginning to end and now Albertans will have to pay a huge bill just like the UCP did with Keystone XL,” said Kayande.
The NDP also took the opportunity to link Thursday’s budget update with the recent renewables pause, saying it will cost jobs and investment in the energy sector.