Alberta overspending

[canadiantdi]

I thought this was a good article.

http://calgaryherald.com/opinion/col...n-overspending




Alberta’s government has long had a spending problem. It is one that predates the past year’s collapse in oil prices and the concurrent drop in revenue for the resource-rich province.

To understand Alberta’s chronic deficits (the province gushed red ink since the last recession despite the various accounting changes that put surplus lipstick on a deficit sow) that fact is key to comprehending Alberta’s budget woes.

This is especially helpful to know as politicians and pundits often refer to only one side of a balance sheet — revenues, but not expenditures. Alberta’s finance minister, Joe Ceci, followed this predictable pattern when he released the province’s first quarter update. Ceci blamed China and the Middle East for low oil prices; he blamed Alberta’s taxpayers for not paying enough tax to balance the province’s books — in other words, it’s all about the revenue.

Dead numbers can be boring things, but in Alberta, they reveal much about how successive governments let program spending soar far beyond what population growth and inflation required.

Some history: Back in the 1993/94, program spending amounted to $8,978 per person. Per capita spending was higher when former premiers Peter Lougheed and Don Getty were in charge in the 1980s, but the early 1990s figure is significant. It was in 1993 and 1994 that Ralph Klein and his colleagues began to dramatically cut government spending.

By 1996/97, per person program spending in Alberta was $6,828 (all figures adjusted for inflation to 2013 dollars). Then expenditures drifted higher in real terms. By 2004/05, at the start of the last energy boom, Alberta’s program spending hit $8,965 per person annually.

In other words, by the mid-2000s, in real terms, program spending was back to early 1990s levels, i.e., before provincial government budget cuts.

After the mid-2000s, Alberta’s program spending continued to march ever-higher beyond the combined effect of provincial population growth and inflation, hitting $10,967 per person by 2013/14.

When I and a former colleague crunched these numbers for a Fraser Institute report earlier this year, we then asked this question: If, after 2004/05, had Alberta increased spending, but in line with population growth and inflation, how much would the provincial government have spent on programs as of 2013/14?

Answer: $35.9 billion in 2013/14, not the $43.9 billion it did spend. That’s an $8 billion difference in one year alone.

In total, had Alberta’s government increased spending, but within sensible parameters, between the mid-2000s and 2013/14 inclusive, $49 billion less would have been spent in that period.

One often hears that Alberta “had” to spend more during the energy boom because of inflation and population growth. Indeed, but that extra $8 billion annually (and $49 billion in total over that period) accounts for population growth and Alberta’s inflation.

Also, the analysis zeros in just on program spending. That means if Alberta’s politicians were more prudent on programs, more taxpayer money would have been freed up for infrastructure. Or fewer deficits would have been recorded. Or both.

Fiscal prudence also means Alberta’s program spending would have “started” at a lower level in recent budgets, making it easier to balance the books when royalties and tax revenues dropped, this year included. Thus, keep that $8-billion figure in mind when Alberta’s finance minister speaks of a $5.9-billion deficit (or the opposition’s calculation of $9.1 billion).

The historical pattern of ever-higher spending, despite any reality on the ground, seems not to bother the new NDP government. In its first quarter update, the new government added another $1.4 billion in program spending beyond the original 2015 budget released by the now-defeated Progressive Conservative government in March.

In Alberta, and regardless of the partisan hue, an eternal temptation exists to overspend, and then ignore that side of the ledger and its effect on the province’s budgetary balance.

Mark Milke is a Calgary author and columnist.

[Wild&Free]

When is Mike going to run for office?

[From The Hip]

I have said it before so I may as well say it again.Alberta does not have a "funding" problem it has a "spending" problem.The public sector is the main culprit.A perfect example of that was the 2 billion Redford gave to the teachers pension plan because it was underfunded.IMO the benefits of that pension plan were obviously too generous because it was not sustainable.It is bad enough that tax payers are on the hook for 50% of teachers pension but to also pay to have the plan topped up by 2 billion is totally unacceptable and it will most likely happen again.

The Alberta government should never have loosened the belt after Ralph Klein tightened it.I am not talking about infrastructure spending but more specifically public sector wages/benefits.

63,000 people have lost their jobs this year and not one of them is a public sector worker.

FTH