Alberta Finance Minister Nate Horner presents the 2024-25 Second Quarter Fiscal Update and Economic Statement. (Photo: Canadian Press)

By David Opinko

Alberta forecasts $4.6B surplus, warns of budget pressures

Nov 21, 2024 | 11:05 AM

Although the Government of Alberta is reporting a growing budget surplus, it says it needs to continue being careful going forward.

The province says its projected surplus will be $4.6 billion at the end of 2024-25. That is up from $2.9 billion in the first quarter forecast and $355 million from the budget.

Much of the improvement is due to higher revenues from personal income taxes and non-renewable resources.

The Second Quarter Fiscal Update and Economic Statement, however, warns of growing pressures on the budget due to population growth.

More than 450,000 people moved to Alberta in the last three years, meaning there will need to be a significant focus on things like housing and building capacity in schools and medical facilities.

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Expenses in several categories were higher than what the government had initially budgeted:

• $451 million for physician compensation incentives
• $265 million for Alberta Health Services to provide services to a growing population
• $240 million to help Seniors, Community and Social Service to deliver income support and disability programs
• $125 million to help schools address rising enrolment
• $124 million to support Alberta’s recovery approach to mental health and addictions
• $91 million mainly to cover AIMCo management fees
• $34 million for the cost of selling oil
• $18 million for post-secondary institutions
• $16 million for Mental Health and Addiction for Recovery Alberta staffing pressures
• $30 million for various other initiatives

Finance Minister Nate Horner says, “These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”

Some other highlights from the Second Quarter Fiscal Update and Economic Statement include:

Revenue

• Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
  • $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
  • $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.

Expense

• Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.

Surplus cash

• After calculations and adjustments, $2.9 billion in surplus cash is forecast.
  • $1.4 billion or half will pay debt coming due.
  • The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.

Contingency

• Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.

Alberta Heritage Savings Trust Fund

• The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
  • The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.

Debt

• Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
  • Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.

The full Second Quarter Fiscal Update and Economic Statement can be found on the Government of Alberta’s website.