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Alberta set to unveil budget in face of declining revenues

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Funding cuts are expected Thursday when Alberta’s Progressive Conservative government unveils a budget in the face of declining resource revenues.

The budget is expected to be the toughest in years as Premier Alison Redford's government grapples with an estimated $6-billion shortfall.

While the specifics won’t be released until Finance Minister Doug Horner delivers his budget speech Thursday afternoon, both he and Redford have warned that cuts are coming. They have said the cuts won't be as drastic as those taken by former premier Ralph Klein in the 1990s.

"I can promise you that this budget will be different from those that we've brought forward in the past," Redford said on Wednesday. She added that "tough choices" had to be made.

Redford said the budget will include a moderate spending increase, but at a level far below the four per cent hike required to maintain programs at current levels.

She said that investments will continue in projects like schools and roads.

“We're going to have a capital plan, we’re going to have an operating plan, and we’re going to have a savings plan, and we started to see that reflected already in the projects like Highway 63,” she said.

“We're going to continue to build because that's the way that we're able to welcome 100,000 people a year to the province.”

Some measures have already been revealed over the past month:

- The province is reducing the number of public service managers by 10 per cent. The ones who remain face a three-year salary freeze, effective April 1.

- The province continues to take a hard line in negotiations with teachers and doctors.

- The Summer Temporary Employment Program (STEP) has been put on hold, putting funding for 3,000 student jobs in jeopardy.

- 41 staff members were laid off after the Royal Alexandra Hospital in Edmonton closed its transition unit.

- The WestView Health Centre in Stony Plain has learned $450,000 will be cut from its funding this year.

- 19 nurses at the Good Samaritan Gerald Zetter Centre in Edmonton will lose their jobs at the end of March.

Even though many experts say a provincial sales tax could easily solve Alberta’s financial woes, Redford has been adamant that the budget will contain no new taxes.

This raises questions about how the province plans to make up such a huge shortfall, which the premier said was caused by the so-called bitumen bubble, the price difference between West Texas Intermediate and Alberta oil.

The province has relied heavily on money stashed in the sustainability fund to make up for deficits in past budgets, but there won’t be enough to cover the gap this year.

The province announced last fall that it was borrowing to complete the twinning of Highway 63 to Fort McMurray. It’s widely believed that more infrastructure projects will be financed that way.

Wildrose Leader Danielle Smith thinks the government will borrow billions of dollars.

"And so she's going to plunge us back into debt and make our kids and grandkids pay for the spending promises of today," Smith said. "I don't think that's right and I don't think Albertans will think that's right."

The larger question for many observers is how Alberta's financial situation can be so bad, when the economy is doing so well.

The Wildrose Party accuses the government of having a spending problem, not a problem with revenue. The NDP and Liberal parties say the province needs to stop relying so much on resource royalties to fund its budget.

NDP Leader Brian Mason believes there will be service cuts.

"I'm expecting that we're going to see cuts to basic services including health and education," he said. "I think we're going to see layoffs of employees at a time when the province is growing and demands for those services are increasing."

Liberal Party Leader Raj Sherman believes Alberta needs to abandon its 10 per cent flat tax and implement a progressive taxation regime that takes people's incomes into account.

The budget speech will start at some point after 3 p.m. MT and will be streamed live on cbc.ca/calgary and cbc.ca/edmonton.