Alberta Budget Forecasts $367 Million Surplus With Health and Education Spending Increases

Alberta Finance Minister Nate Horner speaks to the media at a news conference in Calgary on June 29, 2023. (The Canadian Press/Jeff McIntosh)

Alberta’s 2024-25 budget was tabled on Feb. 29, forecasting a $367 million surplus while increasing spending in health, education, and reserves for dealing with natural disasters.

President of Treasury Board and Minister of Finance Nate Horner announced a budget that increases spending by 4.4 percent in both health care and education. It also increases funding to deal with contingencies like wildfires and drought in the coming year. At the same time, it allocates about $3.2 billion to pay down the province’s $78.4 billion debt.

“Budget 2024 is maintaining Alberta’s competitive advantage, boosting jobs, attracting investment, and strengthening our position as the nation’s economic engine,” Mr. Horner said at a news conference.

The biggest item in the budget is health care, on which the province plans to spend $26.2 billion, just over one third of the province’s total spending of $73.2 billion.

The increase covers higher compensation for doctors, with an 8 per cent increase to $6.6 billion, based on a new fee structure negotiated with doctors. There will also be more spending on facilities for mental health and addictions.

“We want every Albertan to have their own family doctor or health care provider. So we’re investing $475 million to strengthen primary care,” Mr. Horner said.

“We’re training more rural and indigenous family doctors and developing a new compensation model for nurse practitioners.”

Mr. Horner said Alberta schools are seeing record enrolment, and therefore the province has introduced plans to hire some 3,100 education staff and teachers over the next three years. There will be 98 school construction projects in the planning, design, or construction phase this year, along with over $100 million for modular classrooms to ease the pressure of crowded classrooms, Mr. Horner said.

Alberta saw a record amount of the province burned by wildfires last year – some 2.2 million hectares – and 38,000 people evacuated at various times. It’s estimated 60 fires have kept burning through the winter. The 2024-25 budget allocates about $151 million over three years for fighting wildfires.

“Obviously firefighters worked through the winter,” said Mr. Horner. “This funding will allow them to add more crews and get them on the ground. Some of the investment is around technology dealing with fires during the night.” Money is also earmarked to start updating the province’s fleet of fire-fighting aircraft.

Other spending initiatives include funding for 100 more police officers for Calgary and Edmonton to tackle rising crime rates.

Business and Jobs

Budget documents call Alberta the economic engine of Canada, creating about 22 percent of all jobs in the country last year despite having only 12 percent of the population. The budget includes measures that the government says will keep the economy moving.

Mr. Horner announced a tax credit named Alberta is Calling that will offer a refundable tax credit of $5,000 to attract skilled tradespeople.

The province also announced 3,200 more apprenticeship spaces for those learning trades, costing an estimated $102 million over three years.

“The future is promising as Alberta’s economy continues to gain momentum,“ Mr. Horner said. ”We expect people will continue to flock to Alberta, driving our population up by 3.7 percent.”

The province estimates its gross domestic product (GDP) growth to be about 2.9 percent this year and expects around 39,000 housing starts in the coming year.

At the same time, the budget is not as rosy as some expected. Personal income tax cuts promised in the last election have been pushed back to 2026-27.

“[Premier Danielle Smith] gave me multiple things I had to accomplish in my mandate letter,” Mr. Horner said. “One of them was the tax cuts, but also staying within our fiscal framework and balancing the budget. So I’m going to do my best to do both of those things.”

Surplus

The budget forecasts a relatively small surplus of $367 million, much lower than the roughly $2 billion surplus that was talked about last fall. But Mr. Horner said the outlook has changed.

“It’s a combination of debt servicing and costs escalating,” the minister said. “The need for contingency in the year that we’re in, and…other pressures due to the population increases that we’ve seen across ministries,” he said.

The province is also forecasting revenues from energy resources like oil to be slightly lower than last year, resulting in added pressure to reduce spending.

Taxes

The province is also bringing in a $200 tax on fully electric vehicles, similar to what Saskatchewan has already done. The tax is intended to compensate for the fact that EV drivers don’t pay fuel taxes that contribute to road maintenance.

“If you look around, I think 43 or 44 U.S. jurisdictions have already done this, or are in the process of doing this. So we just looked at aligning it with what an average Albertan driver would pay in fuel taxes in the course of a year,” Mr. Horner said.

The province is also raising taxes on tobacco and smokeless tobacco.