The Government of Alberta is cautiously optimistic following the first quarter economic update.
Minister of Finance, and Drumheller-Stettler MLA, Nate Horner provided a provincial budget first-quarter update on Aug. 29.
The update notes that thanks to higher-than-expected oil prices, the Trans Mountain Pipeline coming online, a weakened Canadian dollar and a decrease in overall inflation the provincial surplus is expected to top $2.9 billion at the end of the 2024-25 fiscal year.
This surplus is anticipated to be around $2.6 billion higher than the February budget announcement predicted.
A major challenge the province is facing is population growth; based on first-quarter growth, the province is anticipating a "surge" of immigration topping around 4.6 per cent.
“People across the country see a bright future for Alberta, and they continue to come here in record numbers," said Horner.
"While this population growth is creating challenges and putting pressure on our hospitals, schools and other services, our prudence and discipline are helping to manage these challenges.”
Due to the population growth, the province is funding an additional $125 million to schools to help account for increased enrolments this fall.
The update also notes that the province continues to support those impacted by the 2024 wildfire season with $573 million to date having been allocated from the province's $2 billion contingency fund. This contingency is funding evacuation payments ($13 million), Red Cross donation-matching payments ($10 million) and firefighting ($550 million).
Revenue for the 2024-25 budget year is expected to to hit $76.2 billion, up $2.7 billion from the February update driven by stronger than anticipated oil prices and personal income tax, thanks to the increased population growth.
It was noted that the weakened dollar actually helps resource revenues as they are all calculated in American Dollars.
The Alberta Heritage Savings Trust Fund grew to a value of $23.4 billion in the first quarter, thanks to a 2.1 per cent return on investment; $2 billion from last year's surplus is expected to boost the account to over $25 billion by the end of 2024-25 with plans to increase it to $250-$400 billion by 20250.
The province's 2024-25 capital plan will see around $8.5 billion in spending, up around $212 million from February.
Of note in the capital plan, health care is being cut 14 million from its previously budgeted $1.44 billion while several other categories are receiving increases.
"Expense has remained relatively stable," said Horner.
Expenses have increased by around $101 million, mainly due to the increased education funding.
As far as provincial debt goes, it is expected to reach $86.1 billion by the end of the 2024-25 fiscal year, which is $1.7 billion less than anticipated.
Despite the surplus, due to how the various departments in government manage their finances, the province will be left in a net cash deficit and will need to borrow $0.6 billion for operational spending.
Debt servicing costs for the province are forecast at $3.2 billion for the year, down around $181 million.
Under the province's fiscal framework which focuses on debt repayment and building for the future, $3.7 billion of this year's surplus, one-half of the surplus, is being used for debt repayment.
A further $2 billion is earmarked for the Heritage Fund and $1.7 billion is being used to limit new borrowing.
