EDMONTON - Alberta is closing the books on its first deficit budget in 15 years with a shortfall of $852 million, but that number pales against predictions that the province's deficit could soar to almost $7 billion this year.
Early in the fiscal year that ended in March, the province was predicting an $8.5-billion surplus. Those heady projections turned sour as oil prices tumbled from record highs last summer and natural gas prices fell sharply.
Fifteen years of surplus budgets had put Alberta in the enviable position of being debt-free. But now, rocked by a double whammy of a recession and falling energy prices, the debts are piling up again.
Treasury Board President Lloyd Snelgrove has already said job cuts and tax hikes are a possibility as he prepares to cut $2 billion from the budget starting next year.
The province has nearly $10 billion in a Sustainability Fund that was designed to top up spending when resource revenues fall off sharply. The province plans to dip into that fund to cover the $852-million shortfall.
Tuesday's year-end numbers are a slight improvement over third-quarter projections of a $1.4-billion deficit. Most of those savings were the result of delayed building projects.
The province's Heritage Savings Trust Fund, which was designed to help diversify the province's economy, also took a $3-billion hit when equity markets crashed, leaving its value at $14 billion at the end of March. But the fund has rebounded somewhat from earlier market losses.
Total revenue for the 2008-09 fiscal year was $35.8 billion, while total spending was $36.7 billion.
