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February 8, 2012

Alberta budget scales back slightly on infrastructure spending

The 2012 Alberta Budget is step in the right direction for achieving a balanced budget, but reduces public sector investment in the construction of basic infrastructure.

“Generally this is a positive budget,” said Bill Stewart, vice president of Merit Alberta.

“They are staying the course in terms of creating a climate that is conducive to business activity and prosperity. The growth in revenue will come from an increase in corporate and personal taxes, without raising the rate.”

Finance Minister Ron Liepert presented the budget on Feb. 9, which forecast revenue will grow an average of 10.4 per cent over the following two years, reaching $49 billion in 2014-15.

This is mainly due to higher income tax revenue, resource revenue and a higher Canada Health Transfer.

“We have had a really focused and aggressive infrastructure plan over the last number of years and that will continue over the next three years,” said Liepert.

“So, we will continue to build schools in neighbourhoods, where children live. We are going to have one of the most modern health facilities in the country. The roads and highway system will also be the best in the country.”

During the next three years, the government will invest $16.5 billion in public infrastructure. While the dollars are significant, they represent a slight decline in infrastructure spending.

“On the capital side there is some reduction, but all the projects are being maintained and spread out a bit,” said Stewart. ..d“We would like to see more because the construction industry has a lot of excess capacity and continues to be very competitive in terms of cost.”

Some of this capital spending budget ($5.6 billion) will be allocated to support municipal infrastructure, including $2.8 billion from the Municipal Sustainability Initiative, $540 million from the Green Transit Incentives Program, and $2.3 billion in municipal transportation and water infrastructure grants.

A total of $406 million in capital spending is forecast to be invested in education for 2011-12, which involves 14 new schools in the greater Calgary and Edmonton, 72 new modular classrooms and four new high schools.

Three major projects are expected to be completed in 2012-13 including the University of Alberta’s agricultural facilities in Kinsella and St. Albert, SAIT’s Trades and Technology Complex, and the phase two expansion of Bow Valley College.

Over the next three years, $2.1 billion is allocated to health infrastructure.

Construction will continue or be completed on health facilities across the province, including: Edmonton Clinic South; Fort Saskatchewan Community Hospital; Stollery Children’s Hospital Emergency Department Expansion-Phase 2 in Edmonton; Calgary South Health Campus; Strathcona Hospital in Sherwood Park; a new continuing care facility in Lloydminster; Central Alberta Cancer Centre in Red Deer and three new Regional Health Centres in Grande Prairie, High Prairie and Edson.

For 2012-15, $3.5 billion will be invested in Alberta’s highway network, which includes: the start of construction on the Northeast Anthony Henday Drive ring road in Edmonton; continued construction of Southeast Stoney Trail in Calgary; construction of Nose Hill Interchange on Stoney Trail in Calgary, $521 million for highway maintenance and rehabilitation; $377 million for continued construction on the North-South Trade corridor, and: $387 million for the Northeast Alberta Transportation Corridor.

“Our government will impose strict fiscal discipline to ensure that its revenues and expenditures are managed responsibly, beginning with Bill 1, introduced on Tuesday by the Premier, to mandate results-based budgeting and reviews of all government programs and services,” said Liepert

“This budget also lays the groundwork for three-year funding cycles for municipalities, school boards and post-secondary institutions.”

The deficit is forecast to be $883 million in 2012-13, which will be offset by savings set aside in the Sustainability Fund.

A balanced budget is forecast for the following fiscal year, with projected surpluses of nearly $1 billion in 2013-14 and $5.2 billion in 2014-15.

The president of the Alberta Federation of Labour is more critical of the government efforts to reduce the deficit.

“The Conservatives have, once again, overlooked the real problem: they've simply given away too much in taxes and royalties,” said Gil McGowan. “And that's creating unnecessary deficits and unwarranted pressure on services that matter to Albertans.”

Budget 2012 includes an operating budget of $36.5 billion focused on investing in the three priority areas: families and communities ($22.8 billion); securing Alberta’s economic future ($11.5 billion); and advancing world-leading resource stewardship ($2 billion).

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