Nate Horner, President of the Treasury Board and Minister of Finance, provided a comprehensive update on Alberta’s financial health for the first quarter of the 2024-25 fiscal year. The report highlighted a significant increase in the projected budget surplus, driven largely by favorable oil prices and economic growth. However, Horner also emphasized the need for prudent fiscal management, acknowledging the complexities and challenges that accompany Alberta’s economic trajectory.
At the start of the fiscal year, Alberta’s government forecasted a modest surplus of $351 million. However, by the end of the first quarter, this figure had ballooned to $2.9 billion, marking a $2.6 billion increase. This substantial growth in the surplus was attributed to higher oil prices and the benefits of the recently operational Trans Mountain Expansion (TMX) pipeline, which has improved Alberta’s access to global markets. The narrowing light-heavy oil price differential also played a crucial role, with Horner noting that a $1 change in the differential could impact Alberta’s budget by as much as $600 million.
Despite the impressive surplus, Horner was quick to clarify that this figure represents an accounting surplus rather than a cash surplus. The distinction lies in the fact that certain revenue streams, such as university tuition and income from the Heritage Fund, are not immediately accessible for operational spending. After necessary adjustments, the government forecasts that there will be no surplus cash at the end of the fiscal year, with additional borrowing likely required to meet the province’s needs.
Alberta’s economy continues to show strength, with Horner citing industrial investment and population growth as key drivers. Major projects such as Dow Chemical’s expansions, McCain’s potato processing plant, Air Products’ hydrogen complex, and Imperial Oil’s renewable diesel facility are expected to bolster economic activity. The forecast for West Texas Intermediate (WTI) crude oil has been adjusted to $76.50 USD per barrel for the fiscal year, reflecting the continued importance of energy to Alberta’s economy.
Population growth has also exceeded initial projections, with Alberta’s population anticipated to grow by a record 4.6% in 2024, a significant increase from previous estimates. However, Horner acknowledged that this rapid growth brings challenges, particularly in ensuring that public services can meet the needs of a larger and more diverse population.
The first quarter report highlighted the Alberta government’s commitment to maintaining fiscal responsibility while addressing the province’s pressing needs. Despite the increased surplus, Horner emphasized that spending must be carefully managed to ensure long-term sustainability. The government’s expense forecast for the year has increased slightly to $73.3 billion, up by $101 million from the initial budget. This increase is largely offset by dedicated revenue, with significant allocations made for disaster response, including wildfire fighting costs and emergency evacuation payments.
The government has also committed an additional $125 million to help schools manage enrollment growth and inflation pressures. Capital spending has been adjusted as well, with delayed projects from the previous year now scheduled to move forward. As a result, Alberta’s contingency fund stands at $1.4 billion, providing a buffer for unforeseen expenditures.
Horner reaffirmed the government’s commitment to strengthening Alberta’s healthcare and education systems, noting that the 2024-25 budget includes the largest-ever allocations for these sectors in the province’s history. The goal, he said, is to ensure that all Albertans have access to top-quality services, even as the province’s population continues to grow.
In addition to maintaining robust public services, the Alberta government is also working on delivering a promised personal income tax cut, which is expected to save Albertans $1.4 billion annually. Horner indicated that more details on the tax cut would be shared in the coming weeks, with the aim of implementing the reduction by the next budget cycle.
While the first quarter fiscal update paints a positive picture of Alberta’s economic health, Horner cautioned that the province cannot rely solely on volatile oil prices to balance its budget. The government must make strategic spending decisions that will keep the economy strong and public services sustainable over the long term.
Horner also highlighted the importance of managing Alberta’s debt and saving for future generations. He stressed that the government must act as responsible stewards of taxpayers’ dollars, ensuring that today’s fiscal decisions do not burden future generations. This approach, he argued, is vital for maintaining Alberta’s economic resilience and ensuring that the province remains a prosperous place to live and work.
Alberta’s first quarter fiscal update for 2024-25 reflects both the opportunities and challenges facing the province. With a significantly increased surplus and strong economic indicators, the outlook appears positive. However, as Minister Nate Horner emphasized, the government must balance these gains with careful fiscal management to ensure long-term stability and prosperity for all Albertans. As the province moves forward, the focus will remain on maintaining a strong economy, delivering high-quality public services, and preparing for the future.