EDMONTON, Alberta, April 15 — The provincial government of Alberta said it was freezing salaries and dissolving commissions in an effort to address a budget crises sparked by low oil prices.
“Faced with a 90 percent drop in non-renewable resource revenue, Albertans are confronted with a choice that will have profound consequences for generations to come,” Finance Minister Joe Ceci said in a statement.
The provincial government said it would try to spend its way out of the slump with more than $6.5 billion in programs ranging from $740 million for roads to about $500 million on climate initiatives. As part of the effort to cut costs, meanwhile, the government said it was freezing pay, dissolving as many as 26 provincial agencies and deferring more than $250 million in other spending through 2018.
Salaries were frozen for Cabinet and political staff in October and public service employees in January. Last month, the provincial government estimated the economy, measured in real gross domestic product, will shrink by 1.1 percent this year, after a 1.5 percent decline for full-year 2015. The total revenue forecast for the fiscal year of $31.2 billion is $478 million lower than estimated in the budget last year.
With crude oil prices on pace to remain well below the peak levels from two years ago, Ceci said it may take until the next decade to balance the provincial budget. The government now estimates revenue from non-renewable resources will be at its lowest level in 40 years.
The Canadian Association of Petroleum Producers said last week capital spending in the sector was expected to decline 62 percent from 2014 levels to $24 billion, the largest two-year decline since record-keeping began in 1947.
During past market downturns, Ceci said the government responded with “reckless and extreme cuts” that left taxpayers feeling the burden. The plan now, he said, is to control government spending while at the same time diversifying the provincial economy.
“Our fiscal plan is thoughtfully and carefully reducing the cost of government, while protecting the public services we all count on,” he said.