Alberta’s deficit could balloon to $24.2 billion; finance minister warns of future cuts to services

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The Alberta government provided an additional $500 million in healthcare funding in response to the pandemic, with COVID-19 operating expense initiatives totalling $3.9 billion.

The reality is balancing the budget will almost certainly need to be necessarily delayed.

Finance Minister Travis Toews

The government has also added $1.4 billion to its capital spending plan for this year and plans to spend nearly $10 billion on infrastructure projects.

Toews said the economy is expected to see a partial rebound of 4.6 per cent next year, but “the road to recovery will be slow and fragmented.”

Employment is unlikely to fully recover until after 2021, while real GDP rates likely won’t surpass 2019 levels until at least 2022.

Toews said the government would provide an updated three-year fiscal projection in November, along with a “reset” budget in February 2021.

While economic activity is expected to improve as public health measures are gradually lifted, the government warned the pace of its recovery would depend on how the pandemic unfolds. A “severe” second wave of infections could mean additional public health measures and “derail the recovery in the global economy and oil prices.”

Asked whether Alberta could reevaluate its revenue structure to deal with these uncertainties, including the possibility of implementing a provincial sales tax, Toews said it’s a question that “we as Albertans will have to grapple with” over the long-term.

“At a time like this, at a time of great economic challenge for so many Albertans and Alberta businesses, to look at raising the costs for those businesses and for Albertans, I believe would be irresponsible,” he said.

“In the longer term timeframe, it will be important that Albertans have the discussion that we collectively have a discussion on revenue structure, tax structure.”

More to come…

shudes@postmedia.com
Twitter: @SammyHudes

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