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Lower oil prices force Alberta government to dip into reserves

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As announced in the first quarter fiscal update, the Alberta Government is dipping into its reserve fund to hold the deficit steady at $10.5 million. That means $250 million of the $500 million budgeted for risk adjustment will be used to address revenue shortfalls.

The largest hit was in oil. When the Alberta government created the 2017 budget, predictions were that oil would average out at $55 per barrel. However, oil is hovering around $49 and not looking to rise in the near future.

Finance Minister Joe Ceci says he’s not worried about using half of the reserves only a quarter of the way into the year.

“The risk adjustment monies is being used as we intended it to be used, we’re prudently using only half of that now and we’re going to keep an eye on this. I’m confident we can manage what we said we were going to mange in Budget 2017 with the levers we’ve already put in place.”

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“For the time being we’re going to keep delivering the programs and services Albertans need and rely on and for the time being we’re going to keep up the pressure on finding … savings because those are some of the things we can control. The things we can’t control are world price of oil,” Ceci adds.

However, the province expects revenues to rebound.

“They’re lagging for sure and as the economy strengthens and gains more momentum, we anticipate seeing those numbers come back,” says Ceci.

The savings targets have also been adjusted. They are now double the initial goal, bring them up to $400 million. Ceci says the work for this has already begun.

“A couple of months ago we gave instruction to all ministries to start to look at ways to be more efficient, to reduce expenditures where they haven’t reduced them. We still have more work to do.”

That includes the consolidation of the Public Agency Bureau and restraint in hiring and travel.

The government is remaining positive despite the fall in revenues. The economy is now forecasted to grow by 3.1 per cent in 2017, up from the budget forecast of 2.6 per cent. Alberta also added 17,000 jobs and expects employment to grow by 1.3 per cent in 2017, up from the 0.9 per cent projected initially.

The first quarter covers the period from April 1 to June 30.

Written by Angie Mellen, 106.1 The Goat

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