So if you can’t do it all, do a tax break.In good years, voters simultaneously want more spending on health and education, more investment in the Heritage Savings Fund, and tax breaks. In bad years, they want the same. Unable to do all three, the Smith government went with meeting a campaign promise to cut taxes.Good choice.It would have been a hard decision to run a deficit as well, however. The Smith government is famous for its ambition to practice pay-as-you-go, kitchen-table economics. Some politicians embrace deficits — the prime minister, for example — but for Danielle Smith and co, the projected three years of deficits is akin to living in sin. It was never their vision.Needs must when the devil drives, however.And if ever the campaign promise tax break morphed from good intentions to a desperate necessity, this was the year.With depressed energy prices, the cost of accommodating new arrivals to Alberta, the uncertainties of the on again/off again/on again-but-not-until-April Trump tariffs, the Smith government would have paid dearly in the polls for the ideological rigour it would have taken to deliver a balanced budget.Purists can still take some comfort from the growth in the Heritage Savings Fund, of course. It is now sitting at $25 billion — up from $21 billion two years ago. But, however worthy as the objective is of building up the Heritage Fund, at a time when powerful external forces are upsetting the Alberta economy, the comfort of struggling, lower income Albertans must take precedence, and did.And the way the Smith government is playing it, lower income Albertans could this year save up to $750 on Alberta taxes, with the proposed 2% cut on incomes up to $60,000. Even at today’s inflated grocery prices, that buys a lot of gas and groceries. It remains the best tax deal in Canada — and a campaign promise kept.As for the predicted $5 billion deficit this year, those who can bear to take comfort from irrational hope can pray for a light fire season: The Government of Alberta’s projected deficit includes $4 billion for disaster relief. A less disastrous year than last, would go straight to the bottom line. But of course, it is not to be depended upon.It is also worth noting that at $68 barrel, the treasury’s assumptions on energy prices are not inflated. Hardly a reckless assumption, it leaves room for unaccounted extra revenue. Is it a great budget? No, but in the circumstances, it's the budget that was possible, in a province that relies so heavily upon fluctuating resource revenues. We saw what the NDP did when it was their turn as government to deal with hard times in Alberta. They borrowed and spent, then spent and borrowed some more, all the while inflating the civil service and pretending that they were making progress on unemployment. Alberta still owes the money, and pays interest upon it.That is another way of budgeting, but not one that we would ever endorse.As Finance Minister Nate Horner said in the speech with which he introduced the budget to the legislature, this is not the first time Alberta has had to deal with difficult circumstances. Twelve months ago, we were not anticipating what we are dealing with today; in the twelve months to come, things may look very different again, and better.Meanwhile, a tax break is always a good thing.
So if you can’t do it all, do a tax break.In good years, voters simultaneously want more spending on health and education, more investment in the Heritage Savings Fund, and tax breaks. In bad years, they want the same. Unable to do all three, the Smith government went with meeting a campaign promise to cut taxes.Good choice.It would have been a hard decision to run a deficit as well, however. The Smith government is famous for its ambition to practice pay-as-you-go, kitchen-table economics. Some politicians embrace deficits — the prime minister, for example — but for Danielle Smith and co, the projected three years of deficits is akin to living in sin. It was never their vision.Needs must when the devil drives, however.And if ever the campaign promise tax break morphed from good intentions to a desperate necessity, this was the year.With depressed energy prices, the cost of accommodating new arrivals to Alberta, the uncertainties of the on again/off again/on again-but-not-until-April Trump tariffs, the Smith government would have paid dearly in the polls for the ideological rigour it would have taken to deliver a balanced budget.Purists can still take some comfort from the growth in the Heritage Savings Fund, of course. It is now sitting at $25 billion — up from $21 billion two years ago. But, however worthy as the objective is of building up the Heritage Fund, at a time when powerful external forces are upsetting the Alberta economy, the comfort of struggling, lower income Albertans must take precedence, and did.And the way the Smith government is playing it, lower income Albertans could this year save up to $750 on Alberta taxes, with the proposed 2% cut on incomes up to $60,000. Even at today’s inflated grocery prices, that buys a lot of gas and groceries. It remains the best tax deal in Canada — and a campaign promise kept.As for the predicted $5 billion deficit this year, those who can bear to take comfort from irrational hope can pray for a light fire season: The Government of Alberta’s projected deficit includes $4 billion for disaster relief. A less disastrous year than last, would go straight to the bottom line. But of course, it is not to be depended upon.It is also worth noting that at $68 barrel, the treasury’s assumptions on energy prices are not inflated. Hardly a reckless assumption, it leaves room for unaccounted extra revenue. Is it a great budget? No, but in the circumstances, it's the budget that was possible, in a province that relies so heavily upon fluctuating resource revenues. We saw what the NDP did when it was their turn as government to deal with hard times in Alberta. They borrowed and spent, then spent and borrowed some more, all the while inflating the civil service and pretending that they were making progress on unemployment. Alberta still owes the money, and pays interest upon it.That is another way of budgeting, but not one that we would ever endorse.As Finance Minister Nate Horner said in the speech with which he introduced the budget to the legislature, this is not the first time Alberta has had to deal with difficult circumstances. Twelve months ago, we were not anticipating what we are dealing with today; in the twelve months to come, things may look very different again, and better.Meanwhile, a tax break is always a good thing.
