Monday, March 04, 2013

Budget Day is Nigh...

This Thursday the provincial budget is being presented.  For most of my life this province has crowed about being the most prosperous province in the country.  Still does for that matter.  Which leaves some of us wondering why it appears we are being prepared for a budget of service cuts.

This province is growing.  Growing quickly (with the accompanying rise in cost of living that goes with such growth) in fact.  ANd growing with young families, which means our schools are full -- and then some, which means all our support systems are being stretched.  Our infrastructure is aging and has not been well maintained in teh name of "fiscal restraint" under various governments.  LAst year the PC party promised a bunch of new and modernized schools.  And highway construction.  And improvements to primary medical care.  And all of these are needed.

But here is the kicker.  20 years ago the party took a severe right turn into the land of limited government and fiscal restraint.  Our infrastructure deficit out of that era is staggering--even before you add in oodles of population growth since then which calls for more infrastructure.  The government of the day then decided that getting rid of debt (a laudable goal) was the only priority, and then when they had no debt and a surplus decided that this meant they were collecting too much money.  [Many of us thought this meant they were not spending enough money] And so they crippled the income tax system by moving from a progressive (earn more pay a higher %age) system to a flat tax, which ends up benefiting higher earners the most.  ANd the royalties required from our main economic driver--the oil industry-- were lowered.  Now the government claims that they can not do anything to increase revenue (although some polls, as noted in this article, suggest this is in fact what Albertans would prefer) and is crying broke.

Which leads us to wonder what heavy shoes are going to fall on Thursday.  At the best of times, due to inflation, a spending freeze really means service cuts.  In a place with a growing population this effect is magnified.  Honestly it appears there may be both a revenue and a spending side to moving away from deficit.  But we have to consider ALL the deficits, not just the dollar one.

I predict a tough budget.  Hopefully not as tough as the ones in the early 90's which were marked by horrific and deep cuts to everything.  But tough.  And while it may help the fiscal deficit, I predict it will be at a deepening of the deficit in service and infrastructure.

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