Alberta is on course to record a $2.4-billion surplus at the end of 2023-24, despite a busy wildfire season and ongoing economic volatility..On Thursday, the UCP government said, in its first-quarter budget update, this is $94 million higher than forecast in Budget 2023.."Strong and prudent fiscal management will help Alberta remain the economic engine of Canada," it said. . Fiscal updateFiscal update ."The government’s new fiscal framework requires the government to use at least half of available surplus cash to pay down debt, freeing up money that can support the needs of Alberta families now and for decades to come.".Based on the first quarter update, the UCP government plans to eliminate $2.6 billion in taxpayer-supported debt this fiscal year..“Alberta’s finances remain strong, and thanks to our new fiscal framework, Alberta’s fiscal position is poised to become even stronger," said Nate Horner, President of Treasury Board and Minister of Finance.."Our continued priorities of paying down debt and saving for the future will ensure we have the capacity to meet Albertans’ needs both today and well into the future.”.After the required 50% projected available surplus cash is used to pay off maturing debt, the remaining surplus cash will be allocated to the Alberta Fund, where it can be used for additional debt repayment, contributions to the Alberta Heritage Savings Trust Fund and one-time initiatives that do not lead to a permanent increase in government spending..Also, a projected $2.6 billion will be set aside in the Alberta Fund in 2023-24..Revenue.In oil Alberta trusts..Revenue for 2023-24 is forecast at $71.1 billion, a $491-million increase from Budget 2023.."Alberta’s robust business environment is attracting investment and people from around the country, driving a projected $1.5-billion increase in corporate and personal income tax revenue," the UCP government said.."The corporate income tax revenue forecast has increased by $889 million, following a record-high year in 2022-23.".At 8%, Alberta’s general corporate income tax rate is the lowest in the country. The UCP government said Alberta’s low taxes remain one reason investors choose Alberta.."Keeping life affordable is a key priority for Alberta’s government, which is why it paused the provincial fuel tax on gasoline and diesel in January," the government said.."Extending the pause to the end of 2023 will save Albertans and Alberta businesses 13 cents per litre on gasoline and diesel for the rest of the calendar year.".As a result, fuel tax revenue is forecast to be reduced by $532 million, money that is going directly back into the pockets of Albertans every time they fill up their vehicle..Between April 1 and June 30, the price of West Texas Intermediate (WTI) oil averaged US$74 per barrel. It is now forecast to average $US75 per barrel over the course of the fiscal year, $4 lower than the Budget 2023 forecast.."The resulting impact on Alberta’s revenue is being offset by a narrower light-heavy oil price differential, which is now forecast to average US$15 per barrel, $5 narrower than at budget," the UCP government said.."Bitumen royalties are projected to increase by $515 million in 2023-24; however, overall resource revenue is projected to decrease by $694 million from the budget forecast.".Lower natural gas royalties account for most of the projected decrease due to weaker prices, robust North American production and the impact of wildfires on production in Alberta..Expenses.Expense for 2023-24 is forecast at $68.7 billion, a $397-million increase from Budget 2023..The expense increase before the forecast contingency allocation is $1.6 billion. Of this, $397 million is funded by dedicated revenue and $1.2 billion is set aside as a preliminary allocation from the contingency, leaving $323 million unallocated.."The unprecedented wildfire season in the province prompted Alberta’s government to act swiftly and responsibly to ensure the safety of Albertans in affected areas," the UCP government said.."To date, the government has allocated $750 million for fighting wildfires in the province this year, along with $175 million for uninsurable losses, $75 million of which is expected to be covered by the federal government and $55 million, mainly for emergency evacuation payments.".The UCP government said it will continue to support Albertans during difficult situations such as natural disasters. The operating expense forecast has increased by $179 million, mainly due to a $214-million increase in Health funding that is being fully offset by federal bilateral agreement revenue..Capital grant increases of $170 million are mainly for re-profiling projects from the 2022-23 fiscal year. Debt servicing costs are forecast to increase by $245 million from the budget, mainly due to higher interest rates, reiterating the importance of the government’s commitment to paying down debt..Alberta Heritage Savings Trust Fund.The Alberta Heritage Savings Trust Fund is Alberta’s long-term savings account and the UCP government said it remains committed to growing it.."The fund performed well during the 2023-24 first quarter, earning a 2% return with a net investment income of $739 million," the government said.."Its fair value of net assets on June 30 was $21.6 billion, an increase from the $21.2 billion recorded at the end of the previous fiscal year.".Over five years, the fund returned 6.4%, which is 0.6% above the return of its passive benchmark..Economic outlook.The UCP government said on Thursday by continuing to grow and diversify Alberta’s economy, "Alberta’s government is continuing to exceed expectations."."Alberta’s real gross domestic product is now expected to rise 3% in 2023, up 0.2% points from Budget 2023..The UCP government said projections by private forecasters show the province is expected to lead the country in economic growth this year.."Robust population growth is supporting Alberta’s labour market and generating demand and activity in Alberta’s economy, ultimately boosting the province’s economic outlook," the government said.."Although risks and uncertainty persist due to rising interest rates, high consumer prices and other factors, Alberta’s economy remains well-positioned to withstand any challenges that arise.".The Canadian Taxpayers Federation is applauding the UCP government for staying on track to balance the budget and pay down the debt in response to the first quarter fiscal update..“It’s very good news to see the debt going down and the surplus being put to good use,”, Alberta Director for the Canadian Taxpayers Federation Kris Sims said..“Premier Danielle Smith passed spending restraint into law in the spring and the government must stick to that plan even when special interest groups try to convince the government to spend more money.”
