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Alberta Fiscal Update: Opposition Parties Expect 2012/2013 Deficit Bombshell

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REDFORD AND HORNER
Finance Minister Doug Horner will present Alberta's third quarter fiscal update today and many expect the deficit may run higher than $3 billion. (CP) | CP

If there's one thing Albertans can expect to see from today's fiscal update, according to opposition parties, it's that the province continues to bleed money.

Finance Minister Doug Horner will present Alberta's third quarter fiscal update today and many expect the deficit may run higher than $3 billion.

"It's clear (the PCs) deceived the public during the election on the size of the deficit," Wildrose MLA Rob Anderson told the Calgary Sun Monday.

"It's a damning indictment of the brutal financial mismanagement of the PCs over the last five to 10 years."

Opposition parties are upset with how the PC government has handled province finances.

"It's not going to be pretty. I think we know that," Wildrose Leader Danielle Smith told the Calgary Herald.

"I think what we've seen the premier doing (up to now) is pre-emptive damage control ... because they've punched a big hole in the budget."

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Where 2012 Budget Money Was Spent
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According to the Herald, the government originally forecasted a deficit of $886-million for 2012-2013, but Horner has estimated anywhere from $2.3 billion to $3 billion.

"We know it's going to be uglier than what I put out there in the second quarter; I'm pretty sure of that," Horner told the Herald.

NDP Leader Brian Mason told the Sun that Alberta should expect today's news to be similar to the last two updates -- the deficit will have risen again.

"The government's failure to properly estimate its revenue has landed us in real hot water and a lot of people are going to pay the price for their negligence," he said.

And despite Horner's reasoning that the low price of bitumen has cost the province billions in revenue, Mason charges Alberta remains too dependent on royalties.

"The government has put us in a very difficult position by maintaining relatively low tax rates for corporations and maintaining the flat tax ... which really means we're dependent on royalties from high-priced oil," Mason told the Herald.

"And when that's no longer available, they have compromised our province's financial position."

Liberal Leader Raj Sherman doesn't see the need to skirt around talk of higher taxes, according to the Sun. Sherman believes Albertans would be willing to pay higher taxes if they were guaranteed the money would go to good use.

"I'm saddened to see government giving this news of doom and gloom while really the economy is pretty darn good in Alberta right now," he said.

In a report released today by the Fraser Institute, Alberta is criticized heavily for wasting more than $22 billion over the past seven years by not holding government spending to the rate of inflation plus population growth.

"Alberta's approach to spending in recent years can be compared to a worker who earns a Christmas bonus one year and assumes that money will be there every year," said Mark Milke, author of Alberta's $22-Billion Lost Opportunity and a Fraser Institute senior fellow.

According to the report, Alberta program spending has grown from $9,594 per person in 2005-2006 to to $10,526 in 2012-2013.

"The province has been repeatedly warned by numerous economists about the hazards of budgeting based on boom-time revenues," Milke said. "As a result of ignoring this advice, Alberta is now in its fifth consecutive deficit year and about to produce its sixth red-ink budget."

In his report, Milke says that government should consider the following options if it's serious about balancing its budget:

-- Provide annual estimates of public sector compensation costs in the broad public sector relative to provincial government expenditures;
-- Review overall public sector compensation with an eye to bringing such compensation in line with the private sector;
-- Freeze overall spending growth for a time to make up for past increases that far outran population and inflation growth in Alberta; and
-- Commit to holding any future program spending increases to the rate of inflation plus population growth.

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