FORMERLY THE ROCKY VIEW FIVE VILLAGE WEEKLY
Volume 35, Number 28	OFFICIAL NEWSPAPER FOR THE MD OF ROCKY VIEW #44	Tuesday, July 8, 2008
Home

Provincial surplus exceeds expectations
Don Patterson

The Alberta’s government raked in half-a-billion dollars more than it expected last year.

The provincial surplus has been tallied and came in at $4.6 billion, $550 million more than was forecast in April.

Highwood MLA George Groeneveld said the higher surplus is a factor of a number of issues, including skyrocketing oil prices and larger than expected tax revenues.

"A lot of it comes from the fact the revenue generated from taxes is higher because the pay scale in Alberta is rising. A lot of that comes from higher income, which generates more taxes," said Groeneveld, who is also Alberta’s Agriculture Minister.

The Province has already designated $1.8 billion to go to savings and $1.4 billion towards the provincial capital account for future needs. With the higher surplus, an additional $312 million will be saved and $616 million will go into the Province’s capital account than initially forecasted.

Groeneveld said he believes the province has struck a fair balance between saving and spending on capital projects.

"With the rising population and we did get behind with capital projects, I think we have to take care of them as well," he said. "We have schools that need to be built, and hospitals and roads."

As oil prices continue to rise, Groeneveld said the industry will continue to generate higher revenues. However, he said the government should continue to be conservative guarded with its estimated price for oil and gas.

"We’re trying to be conservative on it, but you want to be reasonably close. When it shoots up like it has, we get criticized by the opposition for intentionally lowballing it. That’s not the intent. It can go the other way and it certainly will," he said.

Scott Hennig, director of Canadian Federation of Taxpayers Alberta, said the government is making the right decision in being conservative in its estimate of oil prices.

"We are never critical of the government when they, so-called, lowball resource revenues. We’d rather they lowball it to come in with a budget that we know they’re not going to have to raise taxes to meet," he said.

Hennig said the federation would like to see the Province treat oil and gas revenues as a separate revenue source because they are more volatile.

Unlike taxes, he said oil and gas revenues represent a one-time income source.

"When you take a barrel of oil out of the ground and sell it, you don’t have it to sell again," Hennig added. "They’re not like tax revenues."

He said provincial revenues from non-renewable resources have ranged between 45 per cent of all government revenues to a low of 13 per cent over the last 30 years.

Hennig said the Province’s higher estimate for natural gas prices could’ve been disastrous had the provincial economy been slower and oil prices not been high.

"The surplus is there because of higher income tax revenues and oil revenues, unlike the last few years which has been largely driven by natural gas prices," he said. "This is the first year since 2001-02 when the provincial government’s estimates overshot the reality when it comes to natural gas prices."