The Province of Alberta released its 2014-15 Annual Report last week, which Finance Minister Joe Ceci says left it with a $1 billion surplus of funds. He described the surplus as positive and said the funds would help the government moving forward.
“The economy in April 1, 2014, when this started out was really different than what ended up at the end of this year and we have a really different situation moving forward,” said Ceci. “The positive surplus is helpful for sure. We’re going to look at everything moving forward in terms of that.”
There are some tax experts, however, who say a closer look at the numbers reveals not only a lack of a surplus, but a $3 billion deficit. Paige MacPherson, Alberta director for the Canadian Taxpayers Federation (CTF), says the government is using “faulty math” and that provincial debt has only increased.
According to MacPherson, this method of “faulty math,” called “accrual accounting,” hides certain debts and deficits by excluding capital spending from the final numbers in the budget. “Some people say it is called ‘hide the deficit.’ It’s sort of a tricky way of accounting and it doesn’t show the true debt picture,” she said.
Despite this amount of debt, though, she says the financial picture may still be better than what the NDP had expected before the release of the report.
“Based on what they said on the campaign, or what they had said when they first took office, the books didn’t look good,” said MacPherson. “Well now they have more revenue than what they had expected, which when governments say they have collected more revenue it often means that they taxed more than they had expected to, but either way, they have more of this revenue to work with. So the question now is what do they do with this?”
MacPherson suggests that if the debt has increased by $3 billion, and that if the government only put aside $34 million for debt repayment, which she says is the case according to the report, than perhaps putting the money toward topping up the deficit might be the best idea.
Another reason this might be a good plan is that the province is starting off the fiscal year with a slow oil economy. If the PCs racked up a $3 billion deficit in one year, with half of that year being good in terms of oil prices, then starting off in a slump should inspire some fiscal responsibility.
“One thing that I’ll mention is that the oil prices are something that are interesting,” she said.
See “Surplus,” Page 11
“Oil prices last year dropped party way through the fiscal year and that means that going into this year we’re probably looking at a more dire situation financially, because we’re starting off this year right off the bat with our oil prices being low. So really what this means is that the worst is yet to come.”
“(The government) collected more revenue than expected, so now I would say it’s a really good time for the government to be responsible and use that to cut spending or to put it onto the debt repayment. It’s a time for fiscal discipline and cutting spending or paying down the debt, I think, looking at these numbers, is the most responsible thing the government could do.”