Revenue shortfall pushes Alberta's financial situation from bad to worse

CALGARY – The Alberta government’s bottom line continues to bleed red ink and the province is planning job cuts and a wage freeze for civil-service managers to try to stem the flow.

Tory Finance Minister Doug Horner announced plans Tuesday for a three-year management salary freeze. It is to begin April 1 and is expected to save taxpayers $54 million.

The government is also reducing the number of public-sector managers by 10 per cent, or about 480 positions, over that same time period, he said. While some positions are vacant and won’t be filled, there will be some people who lose their jobs.

He blamed falling oil and gas revenue. Premier Alison Redford has coined the term bitumen bubble to refer to the difference between the benchmark prices for oil in North America and the lower price Alberta receives for its land-locked oilsands bitumen.

In the first nine months of the 2012-13 fiscal year, Horner said resource revenue was $2.4 billion lower than expected.

“The government is taking decisive, aggressive and immediate action to help address this revenue shortfall,” Horner said as he released the province’s third-quarter fiscal update.

“We can’t control world market prices but we can make decisions that will make an impact on our bottom.

“It’s costing us a lot of money. It doesn’t paint a pretty picture for the third quarter and to be honest it’s not getting all that prettier,” he added.

Alberta is now forecasting a deficit of between $3.5 and $4 billion in 2012-13 — at least four times what was originally predicted in the last budget.

Horner will deliver the 2013-14 budget March 7. He didn’t rule out further job cuts to the rank-and-file within Alberta’s public sector.

“Nothing is off the table,” he said. “The upcoming provincial budget focuses on making the tough but thoughtful decisions necessary to allow the province to continue to deliver on its priorities.”

The head of the Alberta Union of Provincial Employees said talk of layoffs and wage freezes in the public sector is “short-sighted.”

“Government staffing levels haven’t increased since the mid-1990s while the province has added a million people. Employees are stretched as it is,” said union president Guy Smith.

“I question the wisdom of freezing wages, cutting public-sector jobs, and reducing services at the same time demand is increasing.”

But the management cuts were not enough for the Opposition Wildrose party. Leader Danielle Smith suggested middle management ranks need to be thinned by half.

“It seems to me with what they’re putting forward here that this is window dressing,” she said. “The budget that was put forward last year is totally unravelling. We knew it did not contain projections that were remotely achievable.”

The Liberals concurred.

“It’s like putting your finger in the dike and hoping the problem goes away,” said Liberal member Kent Hehr. “Really it’s running around, pretending you’re doing something when you’re not dealing with the real issue.”

Horner said the lower resource revenue expectations have been partially offset by $600 million in savings across ministries and higher-than-expected corporate income tax, stronger investment income and higher revenue from gaming and liquor sales.

Premier Alison Redford had warned there will be tough choices required in the March 7 budget, but has ruled out tax increases or a provincial sales tax.

Alberta New Democrat leader Brian Mason said Albertans should expect service cuts and more broken promises in the budget based on the fiscal update.

“The PCs are obviously planning to balance the budget on the backs of Alberta families — patients, students and workers,” said Mason. “The announcement of wage freezes today should be the writing on the wall for Albertans to expect service cuts in the next budget year.”

Smith is not expecting to be pleased either.

“We don’t know what to expect on March 7,” she said. “But we know it won’t be pretty.”