President of Treasury Board and Minister of Finance Doug Horner announces the Government of Alberta and Alberta Heritage Savings Trust Fund annual report at the Alberta Legislature in Edmonton, Thursday, June 28, 2012. (Perry Mah/QMI Agency)
EDMONTON - Last year's bitumen bonanza balanced the province's budget unexpectedly, but critics don't expect the budget bliss to last.
Finance Minister Doug Horner released the 2011-12 Annual Report, which shows the $3.4-billion projected deficit technically wiped away within a few million bucks, thanks to oil prices topping $100 a barrel.
But that was then.
With oil prices dipping below $80 in recent weeks -- and the province losing $223 million for every dollar the barrel price stays down for a year -- opposition critics were quick to pound Progressive Conservative government spending and predict a financial pounding for the province in the coming quarters.
With Europe and other global economic sectors experiencing financial upheaval, there are reasons to proceed carefully, Horner said.
"There are still plenty of reasons to remain cautious about Alberta's improved fortunes ... we've got some rocky water to go, probably in the next 12 to 18 months," he said.
Revenues of $39.2 billion were 10% higher than budget because of land lease sales, resource revenue and investment income. Expenses of $39.3 billion were up just under 1% due to disaster assistance. Savings and lower capital grants trimmed operating expenses from the budget, while $500 million in emergencies and disasters like the Slave Lake wildfire brought total expenses up $300 million from budget.
Revenue numbers $3.6 billion up from the budget were attributed to increased Crown lease sales, resource revenue and greater-than-expected investment income -- all offset, in part, by lower-than-expected income tax revenue.
Horner, who is also the Treasury Board president, cited fluctuations in the price of oil, the exchange rate, land sales and tax revenues, and suggested he'd like to see the province mitigate risks with financial instruments such as hedging.
He also seemed to pave the way for an adjustment to the present budget.
"We must continue to keep an eye on these issues and will adjust our forecast if necessary at first quarter," Horner said.
Scott Hennig of the Canadian Taxpayers Federation said expenses, including teacher salaries, need to be reined in.
Just to break even takes $97 oil while still reducing the Sustainability Fund, he said.
"This is the wild world of Alberta finances," he said. "Doug Horner's got a heck of a job balancing the budget for 2013 ... they've got to stop the habit of crossing the fingers and hoping for oil to go through the roof."
NDP Leader Brian Mason was skeptical of the Tory government's reliance on energy revenues.
"I think the government's got horseshoes in their pants," Mason said. "This is looking backward and looking forwards. I think the situation's somewhat different."
Wildrose finance critic Rob Anderson said despite a boom in land-lease sales, $11.6 billion in energy royalties and a windfall of investment income, the Redford government blew through $3 billion in savings in 2011.
Anderson predicted a $5 billion budget deficit, a $7.5 billion cash shortfall and a budget crisis that will require drastic action to fix.
"The PCs just can't help themselves from squandering Alberta's wealth," Anderson said. "We're coming off a year of near-record oil prices and land sales and they haven't eliminated the deficit, saved a single penny for the future and they are still raiding our savings to pay for their overspending.
"It's absolutely shameful that we continue to have nothing to show for the staggering amount of money we are taking in."
Horner remained bullish on Alberta's economy, oil fluctuations not withstanding.
The province leads the country with real GDP growth topping 5% last year and Alberta remains the only province in a net financial asset position, with $27 billion, or $7,000 per Albertan, according to the report.
"Nobody should be jumping out of windows today based on $80 oil because three months from now it could be back to $105 as it was two months ago," Horner said.