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Stelmach says budget update will still bleed red

EDMONTON - Premier Ed Stelmach says tough times and tight-fistedbudgets remain the order of the day in Alberta as new figures show theprovince is still expected to hit its forecast deficit of $4.7 billion.

EDMONTON - Premier Ed Stelmach says tough times and tight-fisted budgets remain the order of the day in Alberta as new figures show the province is still expected to hit its forecast deficit of $4.7 billion.

“We're holding the line on our expenditures, but we will continue to show a deficit based on the investment we're making in infrastructure,” Stelmach told reporters Wednesday.

“It's going to be a tough year,” he added, given that Alberta's resource-based economy is linked primarily to customers in the United States.

“There's a considerable amount of unpredictability in some of the economic growth in the United States,” he said.

“Americans are struggling.”

While natural gas prices are forecast to remain low, Stelmach said there are signs the overall resource industry is on the rebound.

He noted the government estimated that it would earn $600 million from oil and gas leases this year, but he said that figure is now forecast to come in at $2 billion this fiscal year.

“I've been hearing from some of the trucking companies, some of the directional drilling companies, some of the fracturing companies, saying, 'We're at capacity and we're going to have a difficult time hiring enough people,”' he said.

Stelmach's comments came after Finance Minister Ted Morton announced he will reveal the second quarter 2010-11 budget figures on Monday.

“While I remain very optimistic about the medium to long-term prospects for our province in terms of job opportunity, wealth creation and job creation, we're still in for a difficult year or two,” Morton told delegates at a meeting of the Alberta Association of Municipal Districts and Counties.

“I'm not closing the door (on spending increases for specific projects). I'm just saying in the next year or two every budget is being squeezed.”

Stelmach, in a lunch-hour speech to the delegates, said in the meantime he is still looking for a fairer deal from the federal government on transfer payments.

“The net contribution from Alberta last year was $21 billion,” said Stelmach.

“The Canada Health Transfer total was $25 billion. We received $2 billion. That left $23 billion transferred to (other) provinces and territories; 21 of that $23 billion came from our province.”

He also said, given that Alberta's population is growing, the per capita money it received on the health transfer effectively fell by $800 million.

“I'm not going to talk any more about that because I don't want to get my blood pressure up more than it is,” Stelmach told the delegates.

Alberta has been struggling in recent years to combat a financial double whammy.

Soaring oil and gas prices brought multibillion-dollar budget surpluses earlier in the decade, allowing the province to all but wipe out its $23-billion debt.

However, the boom times also brought hundreds of thousands of newcomers, jamming schools, roadways, hospitals and available housing.

Stelmach's government has since been playing catch-up on infrastructure, schools, houses, and seniors lodges, but that plan has run into problems in recent years when the global recession turned its multibillion-dollar surpluses into deficits.

Morton has said he hopes to get the budget back in the black by 2012.

For now, the government's rainy day piggy bank - the $15-billion sustainability fund - has been paying off the deficits, but there is concern it could be drained to zero by as early as 2012.

 
 
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