In 2013-14, the Alberta government is will run a projected $5.1 billion deficit.
To be fair, you might have heard a different number. In fact, you might have heard many, many different numbers assigned as the Alberta government deficit this next year.
When the government released its budget last week it significantly changed the way it has previously been presented. The government went from one budget and one deficit number, to three budgets and a pile of different numbers representing deficits, borrowing and “adjustments.”
The result was stakeholder groups, media and opposition MLAs collectively scratching their heads at the strange set of numbers presented.
The next morning the Globe and Mail projected the deficit was $1.9 billion. The Wildrose projected $6.3 billion. The Edmonton Journal and Calgary Sun claimed a $1.97 billion deficit, $4.3 billion in borrowing and a $2.1 billion withdrawal from the Sustainability Fund. The confusion is understandable with everyone having to do the math backwards and try to rebuild the budget based on earlier years.
With the dust settling, it’s time to unmake the budget sausage and explain why the Canadian Taxpayers Federation believes the deficit is $5.1 billion.
Now bear with us, budgets are never sexy, but understanding this budget is critical to the future of Alberta.
The ‘operating deficit’ in 2013-14 will be at least $451 million. That is a cash shortfall for the day-to-day expenses of the government for things like salaries, running MRI machines and buying paperclips. This is the figure that Finance Minister Doug Horner wants Albertans think about.
Yet, while the government spends $38.6 billion on operations, there is still another $5.2 billion spent on the Capital Plan, which has been rolled into separate budget entirely.
The Capital Plan will now be funded almost entirely by debt (88 per cent), in one form or another. The reason that Minister Horner claims that the Capital Plan is not a part of the deficit, is because he essentially considers ‘borrowed money’ to be ‘revenue.’ If you don’t consider money borrowed on your credit card to be the same as money earned from your job, then you don’t agree with Doug Horner.
To understand how much of the Capital Plan is borrowed, one has to peel out several line items that are already counted in the Operational Plan. This includes things like federal transfers for capital funding and self-generated income from arms-length agencies. This leaves the Capital Plan with a funding shortfall of $4.6 billion. This is money that will come from traditional debt and public-private partnerships.
The funding shortfalls for the Capital and Operational plans taken together produce a ‘consolidated deficit’ of $5.1 billion. This is the number that Alberta’s government is going to such great lengths to hide from Albertans.
The CTF’s calculation of the real, consolidated deficit excludes one area of the operational budget that some calculations have included – “cash adjustments.” There’s good reason for this, but one can only go so far when showing how the sausage is made before starting to turn stomachs.
Both sides of the political divide in Alberta have an interest in truthful budgetary reporting. If Albertans and the media buy the government’s budgetary pabulum that excludes the entire Capital Plan from the balance sheet, then the government will have political cover to claim that they have a balanced budget, while they truthfully borrow billions. This is a problem for both those who want government to control spending and those who want to increases taxes.
Taxation and spending levels are a fair debate that we should welcome, but how large Alberta’s deficit truly is, should not be up for debate.
Derek Fildebrandt, Alberta Director
