In the wake of dropping oil prices and a projected $6 billion provincial deficit as a result, the municipality has created its 2015 capital budget without banking on grant funding from the province.
Less than an hour after Finance Minister Robin Campbell spoke in Jasper about plummeting oil prices and impending provincial budget cuts, Jan. 13, council met to discuss the proposed capital budget and heard that the municipality’s director of finance is playing it safe this year, out of fear that the province will discontinue its grants.
Each year the municipality usually receives a Municipal Sustainability Initiative (MSI) grant for capital projects, as well as one for operating costs. In 2014, the capital grant was for $1.4 million. Of that, the municipality still has $900,000 left, which it will use in 2015 to purchase a new grader and garbage bins, as well as pay off part of the loan for the fitness centre.
But, as the budget stands, it does not anticipate that level of MSI funding for 2015.
“[The proposed budget] is not relying on $1.4 million in MSI because I don’t believe it’s coming,” explained Alice Lettner. “Until I actually have that money in my hand—it’s like what happened in 2009 when [the municipality] was supposed to receive $2.4 million and we got $942,000.”
During Campbell’s talk at the general meeting of the Jasper Park Chamber of Commerce, Coun. Brian Nesbitt inquired about the effect the province’s looming cuts might have on MSI funding.
In response, Campbell, who, as well as being finance minister, is MLA for West Yellowhead, said it will be up to the Minister of Municipal Affairs to determine how she will trim the fat in her ministry, and that thinning could come from grants.
“Her position is that we need [MSI grants], my position is show me what else you can cut,” he said, referring to the five per cent, across the board, cuts that are required of each ministry.
“We know that there’s commitments of MSI, we know that those commitments were made and I think our premier has made it clear that he wants to live up to those commitments—how that’s going to fold out this year, I can’t say yet.
“I know that Diana [McQueen] and I have had some conversations and she’s very passionate about MSI because she understands the importance of it, being a former mayor, but again when I’m looking at a $6 to $7 billion deficit it’s a new ballgame and we’ll have to look at everything.”
The projected provincial deficit is the result of dropping oil prices.
“Since June we’ve seen a drop in price from $107 to $50, that’s more than a 50 per cent reduction in the span of a few months. Imagine if your salary was slashed by that amount, you would feel the pain and have to adjust to the new reality,” said Campbell.
As of Tuesday morning, the price per barrel was down to $45.15.
To combat the effect of rapidly declining oil prices on Alberta’s bottom line, Campbell explained that the province is taking a three-pronged approach.
“A third of our plan is to reduce our costs, a third of our plan is to look at revenues and a third of our plan is to use some of our contingency to make sure people still want to invest in the province and consumers still spend money,” he explained.
He said, although there is talk of reducing costs and cutting five per cent from each ministry, the plan isn’t to reduce services, but rather to streamline them.
“We’re going to have to sit down with labour, we’re going to have to sit down with people in our government and we’re going to have to look at making sure we’re doing a better job of delivering services.
“We’re not going to cut healthcare, for example, but we are going to make sure we’re getting the best bang for our dollar in healthcare. So it may look like a reduction at the budget level, but we’re going to make sure we’re providing those core services in a more responsible manner.”
At the suggestion of a provincial sales tax to bolster the province, Campbell said he’s reluctant to introduce a new tax when there is still room for belt-tightening within the government.
“Until I’m comfortable that we’ve reduced all the waste and we’ve got our core services in place—healthcare, education, seniors, the most vulnerable—then everything else is on the table to look at: are they things that we need, are they things that are nice to have?
“Until we’re finished that conversation, I’m not prepared to entertain any discussion as far as looking at a provincial sales tax.”
That response came on the same day that national media outlets reported that Premier Jim Prentice had conceded to considering a provincial sales tax.
In a Canadian Press story, the premier was quoted as saying: “I’m not embracing a sales tax. Let’s be clear.
“I’ve simply said I want to hear what Albertans think about cost containment, about deficits and about revenue increments to the government.
“Certainly there are people who have views about a sales tax, and I welcome their opinions.”
Campbell said the government’s approach is one of fiscal responsibility.
So, rather than following in the footsteps of previous governments and instituting cuts across the board to make up the $6 to $7 billion deficit—a move that would likely result in a crippling recession—it is looking for other long-term solutions.
“There’s only so much money to spend, and we have to get out of this, you know, when times are good we spend it like drunken sailors and when times are bad we cut. It’s not fair to anybody to continue to do that,” he said.
The provincial budget is expected in the spring.
Campbell said Alberta’s should expect it to be “no frills,” with a focus on core government services that ensure the province’s most vulnerable people receive the supports they need.
“We will weather this,” he said. “Alberta has been through difficult times before and we know we’ll get through this one as well, and the price of oil will rebound.
“We will practice prudent and cautious financial management moving forward and we will make the right choices to restore the province’s economic health and continue delivering on Alberta’s priorities, including infrastructure that keeps pace with population growth and the core programs and services Albertans use everyday.
“Ultimately this is a time of transition to a more predictable and sustainable framework, so that when better days return, Alberta will be ready to make the most of them.”
Nicole Veerman
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