Today, Alberta Finance Minister, Travis Toews, tabled his second budget in four months as he introduced the 2020-21 budget and forecast a deficit of $6.8B on revenues of $49.98B and expenses of $56.8B. Beyond the 20-21 fiscal year today's budget forecast a further reduction in the annual deficit to $2.71B for 21-22 and a $706M surplus in 22-23. In order to achieve these targets the budget continues on the same path of reducing overall spending by 2.8% by 22-23 while at the same time maintaining or slightly increasing spending in health, education and core social services.
As mentioned in the Throne Speech earlier this week, one of the key pillars of Budget 2020 is the introduction of “A Blueprint for Jobs” that includes several previously announced measures including, the Alberta corporate tax cut from 12% to 8% (by 2022), the Petrochemicals Diversification Program, the rollout of the TIER program, and the government’s plan to reduce regulatory burden by one third in the government's first term. In addition, the "Blueprint for Jobs" also includes accelerating growth-oriented projects through creating job opportunities, accelerating the reclamation of legacy sites (including orphan wells) and developing a 10-year tourism strategy with a goal to double tourism spending in our province. Through these measures - and others - the Alberta government projects capital investment will increase, jobs will be created, unemployment will go down and gross domestic product will see healthy increases over the next three years - all of which contribute to a boost in government revenues. These increases, along with reducing overall spending, are forecast to eliminate the deficit over the next three years.
The government is making certain economic assumptions that need to be achieved over the next three years in order to meet its revenue, expense and deficit projections. These assumptions include;
Western Canada Select oil price increasing from an average of $51.20 in 2020-21 to $60.60 by 2022-23;
GDP increasing at a pace of 2.8% per year over the next three years;
unemployment reducing from 6.7% to 5.1%; and,
the US/Cdn exchange rate increasing from 76.5 cents to 77.5 cents.
Finally, the government also introduced Bill 4 - The Fiscal Planning and Transparency (Fixed budget period) Amendment Act, which mandates the budget to be introduced no later than the end of February each year.
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