Alberta’s government says that it may have to tighten its spending further if global market uncertainty continues to weigh on its finances.
The province’s government says that revenues came in weaker than expected in its first quarter, and so it is taking action to control spending. For 2012-2013, the government says it will cap overall operating spending, increase savings to at least half a billion, review capital spending, and respond to emergent needs as necessary.
It says that revenue decreased by $400 million in the first quarter because of lower bitumen royalties, lower conventional oil royalties and lower Crown land lease sales, coming in at $9.3 billion, compared with the $9.7 billion it budgeted. Expenses also increased by $5 million due to disaster funding. Based on the results so far, Alberta could see a deficit of between $2.3 billion to $3 billion, it says. It budgeted for an $886-million deficit.
“My mandate is to deliver a balanced budget by 2013-2014 and I will deliver on that mandate,” pledged Doug Horner, the province’s finance minister and president of Treasury Board. “We can’t control the world events that impact our revenue but we can take steps to stay on course.”
The government notes that, historically, the first quarter does not indicate the province’s fiscal position at year end. However, if revenue remains low, it promises to further tighten its belt to address those pressures.
“All economic indicators show a promising long-term future for Alberta… However, there are short-term hurdles to clear, so we must take a prudent approach to ensure our economy remains strong,” said Horner.