Alberta
Alberta’s projected surplus balloons: Mid-year budget update
Mid-year update: Keeping Alberta’s finances on track
Alberta’s government continues to manage the province’s finances responsibly with the future in mind.
Alberta continues to lead the nation in economic growth and is forecasting a surplus of $5.5 billion in 2023-24, an increase of $3.2 billion from Budget 2023. The province’s fiscal outlook continued to improve in the second quarter of 2023-24, boosted by strong bitumen royalties and higher income tax revenues.
However, volatile oil prices, continued inflation challenges and uncertainty due to slowing global growth could still affect the province’s finances going forward. Debt servicing costs will be higher than previous years due to higher interest rates, reinforcing the importance of the government’s commitment to balance the budget.
“Alberta continues to stand out as a leader when it comes to fiscal stability and economic resilience in the midst of so much global uncertainty. Our second-quarter fiscal update is another positive report, showing strength in Alberta’s finances and economy and positioning us for future growth and prosperity.”
The government continues to spend responsibly, maintaining its commitment to keep funds in the province’s contingency for disasters and emergencies. The government’s new fiscal framework requires the government to use at least half of available surplus cash to pay down debt, freeing up money that can support the needs of Albertans for generations. The government continues to reduce the province’s debt burden and will pay down a forecasted $3.2 billion in debt this fiscal year.
Alberta’s government is turning its focus to developing next year’s budget, so it supports Albertans’ needs and the province’s economic growth while maintaining the government’s commitment to responsible spending within the fiscal framework. Budget 2024 consultations are open and Albertans are encouraged to share their feedback to help set the province’s financial priorities.
Revenue
- Revenue for 2023-24 is forecast at $74.3 billion, a $3.7-billion increase from Budget 2023. The increase is due to increases across different revenue streams. In addition, the price of West Texas Intermediate (WTI) oil is forecast to average US$79 per barrel over the course of the fiscal year, in line with the Budget 2023 forecast.
- Personal and corporate income tax revenue is forecast at $21.8 billion, $1.8 billion higher than at budget.
- Bitumen royalties are forecast at $14.4 billion, an increase of $1.8 billion from budget.
- Overall resource revenue is forecast at $19.7 billion, $1.3 billion higher than the budget forecast.
- Beginning in 2024, Alberta’s government will continue to offer fuel tax relief when oil prices are high, even as the province transitions back to the original fuel tax relief program, which is based on average quarterly oil prices.
- Albertans will save some or all of the provincial fuel tax on gasoline and diesel when oil prices are $80 per barrel or higher during each quarter’s review period.
- Although oil prices have been below $80 in recent weeks, Albertans will continue to save at least four cents per litre on the provincial fuel tax in the first three months of 2024 as the tax is phased back in.
- The government’s fuel tax relief efforts, which include the pause to the end of 2023 and additional savings over the first three months of 2024, are forecast to reduce other tax revenue by $524 million in 2023-24.
Expense
- Expense for 2023-24 is forecast at $68.8 billion, a $481-million increase from Budget 2023.
- Capital grants are up marginally from Budget 2023, but down from the first-quarter forecast, mainly due to funding schedules for Calgary and Edmonton LRT projects.
- Debt servicing costs are forecast to increase $309 million from budget, a reflection of ongoing high interest rates and inflation.
- Total expense has increased by $1.9 billion, $0.5 billion is directly offset by revenue and $1.4 billion is absorbed by the $1.5-billion contingency.
- In total, $123 million of the 2023-24 contingency remains unallocated.
- $1.2 billion in disaster and emergency costs are forecast for the current fiscal year.
- $750 million for fighting wildfires in the province
- $165 million for AgriRecovery to support livestock producers affected by dry conditions
- $253 million to provide financial assistance to communities for uninsurable damage from spring wildfires and summer flooding
- $61 million for evacuation and other support
- The operating expense forecast has increased by $319 million, including an additional:
- $301 million for Health
- $48 million for Advanced Education
- $48 million for Energy and Minerals
- $33 million for Mental Health and Addiction
- $30 million for Education
- $14 million for Indigenous Relations
- Offset by decreases of $187 million for lower-than-expected program take-up of affordability payments and re-profiling of TIER spending to 2024-25.
Alberta Heritage Savings Trust Fund
- The Alberta Heritage Savings Trust Fund’s market value on Sept. 30, 2023, was $21.4 billion, up from the $21.2 billion reported at March 31, 2023.
- The Heritage Fund returned 0.9 per cent over the first six months of 2023-24.
- Over the five-year period ending on Sept. 30, 2023, the Heritage Fund returned 5.9 per cent, which is 0.5 per cent above the return of its passive benchmark. While the Heritage Fund is outperforming its benchmark return, it is below the long-term real return target of 6.9 per cent, again a result of interest pressures.
- The Heritage Fund generated net investment income of $1 billion in the first half of the fiscal year.
Economic outlook
- Alberta’s economy continues to be resilient, with continued growth projected over the three-year forecast.
- Alberta’s real gross domestic product (GDP) is expected to grow 2.8 per cent in 2023, in line with the Budget 2023 forecast.
- Despite interest rate increases, high prices and slower global economic growth, Alberta’s economy is forecast to keep expanding. The pace of growth, however, will be slower compared with the last two years when the province was recovering from the pandemic.
Alberta Fund
- The amount of surplus cash available for debt repayment and the Alberta Fund is determined after a number of required cash adjustments have been made. For 2023-24, this includes $5.1 billion from the 2022-23 final results to start the year.
- The Alberta Fund contribution for 2023-24 is forecast at $1.6 billion.
- Money in the Alberta Fund can be used toward additional debt repayment, the Heritage Savings Trust Fund, or one-time initiatives that do not permanently increase government spending.
Related information
Alberta
Fortis et Liber: Alberta’s Future in the Canadian Federation
From the C2C Journal
By Barry Cooper, professor of political science, University of Calgary
Canada’s western lands, wrote one prominent academic, became provinces “in the Roman sense” – acquired possessions that, once vanquished, were there to be exploited. Laurentian Canada regarded the hinterlands as existing primarily to serve the interests of the heartland. And the current holders of office in Ottawa often behave as if the Constitution’s federal-provincial distribution of powers is at best advisory, if it needs to be acknowledged at all. Reviewing this history, Barry Cooper places Alberta’s widely criticized Sovereignty Act in the context of the Prairie provinces’ long struggle for due constitutional recognition and the political equality of their citizens. Canada is a federation, notes Cooper. Provinces do have rights. Constitutions do mean something. And when they are no longer working, they can be changed.
Alberta
30 million contraband cigarettes valued at $25 million dollars seized in Alberta
New release from Alberta Gaming Liquor and Cannabis (AGLC)
Record setting contraband tobacco seizures result from AGLC investigations
Alberta Gaming Liquor and Cannabis (AGLC) recently concluded several investigations which netted two of the largest contraband tobacco seizures in Alberta history. The combined total of the contraband tobacco seized was 154,800 cartons of contraband cigarettes (30.7 million individual cigarettes). These seizures are a result of the work conducted by AGLC’s Tobacco Enforcement Unit with the assistance of provincial law enforcement agencies.
- In a January 2024 investigation, approximately 43,500 cartons (8.7 million individual cigarettes) were seized. This equates to $7 million in retail value with a provincial tax avoidance of $2.4 million. This included the seizure of 15,000 grams of contraband shisha.
- In April of 2024, 60 wrapped pallets were seized from a warehouse setting netting a total of 111,300 cartons of contraband cigarettes (22 million individual cigarettes) which equates to over $18 million in retail value with a provincial tax avoidance of $6.6 million.
- Criminal Charges are pending in both cases.
“These are significant contraband tobacco investigations involving individuals that are part of organized networks whose proceeds defraud Albertans millions of dollars in tax revenue. AGLC will continue to work with our partners to investigate and disrupt the individuals and organizations involved in these illegal activities as part our commitment to a strong contraband tobacco enforcement program in Alberta.”
- Gary Peck, Vice President, Regulatory Services, AGLC
“Contraband tobacco hurts law abiding businesses that follow the rules, and it costs Albertans millions each year from lost tax revenue. Our government is committed to keeping illegal tobacco off the streets and ensuring that the sale of tobacco products comply with the law.”
- Dale Nally, Minister of Service Alberta and Red Tape Reduction
Over the last nine months, AGLC’s Tobacco Enforcement unit has seized an estimated 35 million contraband cigarettes and 115,000 grams of contraband shisha from across the province. The total potential lost tax revenue is estimated to be more than $10.1 million.
Contraband tobacco:
- is any tobacco product that does not comply with federal and provincial laws related to importation, marking, manufacturing, stamping and payment of duties and taxes;
- comes from four main sources: illegal manufacturers, counterfeits, tax-exempt diversions and resale of stolen legal tobacco; and
- can be recognized by the absence of a red (Alberta) or peach/light tan (Canada) stamp bearing the “DUTY PAID CANADA DROIT ACQUITTÉ” on packages of cigarettes and cigars or pouches of tobacco.
In addition to lost revenues that may otherwise benefit Albertans, illegally manufactured products also pose public health and safety risks as they lack regulatory controls and inspections oversight.
Albertans who suspect illegal tobacco production, packaging and/or trafficking are encouraged to contact AGLC’s Tobacco Enforcement Unit at 1-800-577-2522 or Crime Stoppers at 1-800-222-TIPS (8477).
Under a Memorandum of Understanding with Alberta Treasury Board and Finance, AGLC enforces the Tobacco Tax Act and conducts criminal investigations related to the possession, distribution and trafficking of contraband tobacco products. In 2022-23, provincial revenue from tobacco taxes was approximately $522 million.
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