On 28 February 2023, the Danielle Smith government tabled Alberta’s 2023-2024 budget. Projecting a .4 billion surplus for the coming fiscal year, the budget announced some spending increases; but many are effectively cuts when one accounts for both inflation and population growth. Here are 10 things to know: The budget itself contains projections pertaining to inflation and population change. In the upcoming fiscal year, the budget projects 3.3% inflation (using the Consumer Price Index) and a 2.9% population increase. When you add those figures together, you get 6.2%. That means any increase in nominal spending needs to be at least 6.2% in order to keep up with current spending. Operating expenses in general will see an effective cut of 3.2%. For the
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On 28 February 2023, the Danielle Smith government tabled Alberta’s 2023-2024 budget. Projecting a $2.4 billion surplus for the coming fiscal year, the budget announced some spending increases; but many are effectively cuts when one accounts for both inflation and population growth.
Here are 10 things to know:
- The budget itself contains projections pertaining to inflation and population change. In the upcoming fiscal year, the budget projects 3.3% inflation (using the Consumer Price Index) and a 2.9% population increase. When you add those figures together, you get 6.2%. That means any increase in nominal spending needs to be at least 6.2% in order to keep up with current spending.
- Operating expenses in general will see an effective cut of 3.2%. For the 2022-23 fiscal year, they’re forecast to be $55,384,000,000. For 2023-24, they’re expected to be $57,038,000,000. In nominal terms, that’s a 3% increase. But after one accounts for this government’s own projections with respect to both inflation and population growth, that’s effectively a 3.2% cut.
- Compensation for Alberta’s public service will see an effective cut of 2.9%. For 2022-23, it is forecast to be $28,522,000,000. Its estimate for 2023-24 is $29,580,000,000. In nominal terms, that’s a 3.7% increase. However, when one accounts for both inflation and population growth, it’s effectively a 2.9% reduction.
- In spite of an aging population, health operating expenses will see an effective cut of 2.1%. According to the budget document: “Budget 2023 provides $24.5 billion for Health operating expense in 2023-24, an increase of 4.1 per cent or $965 million from the 2022-23 forecast.” After one accounts for inflation and population growth, that translates to a 2.1% cut.
- Operating expenses in the K-12 education sector will see an effective decrease of 2.0%. Total operating expenses for the Ministry of Education are forecast at $8,477,000,000 for the current fiscal year. In 2023-24, they’re estimated to be $8,836,000,000. In nominal terms, that’s a 4.2% increase. But after taking inflation and population growth into account, that’s effectively a 2.0% cut.
- The provincial government will give post-secondary institutions less operating funding. Provincial operating funding for post-secondary institutions is forecast at $2,431,000,000 for 2022-23. For 2023-24, its estimated at $2,446,000,000. In nominal terms, that’s a 0.6% increase. After accounting for inflation and population growth, that’s a 5.6% decrease. The budget also announced that post-secondary institutions won’t be able to increase tuition fees by more than 2% annually, beginning in 2024-25. And according to the budget speech, “the student loan interest rate will be reduced and the no-interest, no-payment grace period will be extended to one year after graduation.”
- There will be important enhancements to income assistance programs for low-income households. The Alberta Child and Family Benefit (ACFB), Income Support,Assured Income for the Severely Handicapped (AISH) and the Alberta SeniorsBenefit will all be indexed to inflation. What is more, according to the budget document: “Seniors with an adjusted householdincome below $180,000 are [now] eligible for six monthly payments of $100.Similarly, parents or guardians are also eligible for monthly payments of $100for six months for each child under 18 if their adjusted household income isbelow $180,000. Albertans on these core programs were automatically enrolledto receive affordability payments.” The ACFB, AISH, Income Support and Seniors benefits will also see a one-time 6% increase. And with the ACFB: “Families will also benefit from the increase to phase-out thresholds, as the maximum benefit begins to be reduced at a higher income level.”
- Funding was announced for affordable housing and homelessness. In terms of housing, the budget announced nearly $198 million in new capital funding (over three years) for affordable housing, with the breakdown as follows: $137.7 million for the Affordable Housing Partnership Program; $16.8 million for the Indigenous Housing Capital Program; $9 million for Capital Maintenance and Renewal Funding; and $34.3 million for “Stronger Foundations strategy implementation capital funding.” As for homelessness, the Homeless and Outreach Support Services program provides funding to municipalities for homelessness. For 2022-23, the forecast amount is $224 million. For 2023-24, it will be $244 million. In nominal terms, that’s an 8.9% increase, which means new homelessness funding for communities overpowers both inflation and population growth for the upcoming fiscal year.
- Several initiatives were announced with respect to substance use. According to the budget document, $155 million has been committed over three years for “recovery communities” in several communities. And according to post-budget analysis in the Edmonton Journal: “The province is also spending $30.4 million on ‘initiatives that reduce harm,’ such as supervised consumption services, Naloxone kits and other outreach supports. This is an increase of $410,000 from the 2022-23 forecast, but down from $35.5 million in 2021-22.” A lengthy Twitter feed from Anna Junker provides further disaggregation of these figures here.
- Alberta remains Canada’s lowest-taxed province, and by a considerable margin. According to the budget document itself: “In 2023-24, Albertans and Alberta businesses would pay at least $19.7 billion more in taxes if Alberta had the same tax system as any other province.” Alberta continues to be the only Canadian province without a provincial sales tax.
In sum. When one accounts for both inflation and population growth, this budget announced several cuts, all of which would be unnecessary if provincial taxes were even modestly higher. Measures pertaining to both income assistance programs for low-income households and affordable housing will help address both poverty and a lack of affordable housing.
I wish to thank the following persons for assistance with this blog post: Jacqueline Alderton, Yale Belanger, Ron Kneebone, Heather Morley, Meaghon Reid, Sylvia Regnier and several persons whose identity is being protected.