March 4, 2024

Weekly EconMinute—Provincial revenue and spending as of Budget 2024

On February 29, the Alberta government released Budget 2024 titled “a responsible plan for a growing province.” But is it?

Topline numbers can be misleading. To see what’s really going on in the budget, we adjust those numbers for inflation and population growth (i.e. their “real per capita” value).

Overall, Budget 2024 shows that holding the line on spending is a key component of the government’s plan for fiscal sustainability. Furthermore, it reinforces the fact that the rule set out by the province’s fiscal framework to limit operating spending growth to that of population and prices is a ceiling, not a baseline. In other words, Albertans should not expect spending to grow to the maximum level allowable in any given year.

Here’s how the numbers break down:  

  • In the 2024-25 fiscal year, total government revenue is expected to narrowly outpace expenses, resulting in a razor-thin budget surplus of $367 million.
  • However, by fiscal year 2026-27, revenue is expected to grow more than expenses, amounting to a more sizable $2.6 billion surplus.
  • What creates this gap is not an increase in tax revenue from individual Albertans, but rather a 3% cut in real, per capita spending.
  • Part of this decrease is due to shrinking debt, but the rest is the result of a 2% cut in program spending over this time.
  • Within program spending, the biggest cuts versus last year will come from “other programs” (i.e., beyond the key spending categories of health, education, and social services) while social services and education will see more moderate cuts and health care will see modest growth.

As for whether this budget is responsible is a harder question to answer. Holding the line on spending will be no easy feat. An aging population combined with a cohort of adolescents set to enter post-secondary will no doubt put pressure on government spending. Nonetheless, it’s important to remember that spending levels and quality of service are not synonymous. To ensure spending stays in check, without serious trade-offs for individual Albertans, the province has its work cut out: to minimize inefficiencies, think creatively, and ultimately maximize the value of every single tax dollar spent.  

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