Alberta’s budget deficit could hit $4 billion on lower oil revenues
() - A $2.4 billion drop in resource revenue has put Alberta on pace for another massive deficit of between $3.5 billion to $4 billion, Finance Minister Doug Horner said Feb. 19 as the province revealed its third-quarter fiscal update. The new forecast suggests the red ink will be four times deeper than was forecast in the budget last year. The province initially predicted an $886 million deficit.
Horner blamed the ballooning deficit on the discounted price Alberta companies are getting for their heavy oil or bitumen from the oilsands, which has had a dramatic impact on provincial royalties and taxes. "As a landlocked province with limited access to markets for our oil resources, Alberta in continuing to face serious challenges to our bottom line," Horner said in a news release.
In addition to the so-called bitumen bubble that has increased the differential between the price of Alberta heavy oil and West Texas Intermediate, the higher exchange rate and lower land lease sales have also hit the treasury hard, Horner said. He said the upcoming March 7 budget release will reflect "tough but thoughtful decisions" necessary to allow the province to deliver on its priorities.