10 things to know about the 2020-21 Alberta budget

The 2020-21 Alberta budget was tabled on February 27, just four months after the previous post-election budget. Jason Kenney’s United Conservative government is cutting public spending while also cutting corporate taxes, and thousands of public sector jobs are expected to be lost over the remainder of his term.

Here are 10 things to know about this year’s budget.

1. Total nominal expenses will decrease by 2.9% in 2020-21. Since Alberta’s expected to see 2% inflation and 1.6% population growth in the year ahead, this amounts to a real per-person reduction in provincial government spending of 6.5% for the upcoming year.
2. Health spending will remain at $20.6 billion. But again, after accounting for inflation and population growth, this translates into an annual spending cut of 3.6%. This will result in substantial job cuts in Alberta’s health care sector. Meanwhile, Alberta’s population is aging.
3. Nominal spending on K-12 education will increase by $100 million. Since current K-12 education spending is $8.3 billion annually, this translates into an almost 3.6% decrease in real, per-capita spending levels. This additional $100 million will not come from the provincial government but from schools’ own-source revenue, which includes revenue generated from fundraising, vending machines, casinos, raffles and bake sales.[1]
4. The real loser in this budget is the post-secondary education sector. Operating expenses for the post-secondary education sector will see a 6% decrease (in nominal terms). After adjusting for both inflation and population growth, this translates into a cut of 9.6% over just one year. As a result of these cuts, tuition fees will rise and there will be additional staff layoffs.
5. The operating budget of the Ministry of Community and Social Services is maintained at $3.9 billion. After adjusting for both inflation and population growth, this translates into a cut of 3.6% over one year. This ministry provides supports for persons with disabilities, persons experiencing homelessness and Albertans fleeing domestic and sexual violence.
6. An additional $100 million was announced for a new Mental Health and Addictions Strategy. And a further $40 million over three years was announced for the overdose crisis. But many public health experts have criticized this government’s lack of appreciation for the benefits of harm reduction (e.g., supervised consumption services).
7. The Seniors Drug Program will no longer cover spouses and dependants younger than 65 . What’s more, means-tested deductibles will be introduced later this year, meaning that higher-income households will pay additional user fees. The program will see a reduction from $589.6 million in 2019-20 to $517.4 million in 2020-21.
8. In nominal terms, annual operating expenses of the Ministry of Seniors and Housing will be identical to last year. But after adjusting for both inflation and population growth, this translates into a cut of 3.6% over one year. This is quite regrettable, considering that Alberta already underinvests in subsidized housing relative to other provinces.
9. The budget announced a 32% cut to housing maintenance over three years. This comes out of the Ministry of Seniors and Housing’s capital budget and does not account for either inflation or anticipated population growth. As a result, hundreds of existing subsidized housing units will likely be lost across Alberta, keeping in mind that, on a per capita basis, Alberta currently has far fewer subsidized rental units than the rest of Canada.[2] I also have it on good authority that the Indigenous Housing Capital Program, which seeks to increase the supply of affordable housing for Indigenous peoples, will be cut from $120 million over four years to $35 million over four years.
10. Alberta remains Canada’s lowest-taxed province. The budget proudly boasts this point, noting that Alberta would collect $14.4 billion more in annual taxes if Albertans collectively paid the same tax rates as Canada’s second-lowest tax province (Ontario). Needless to say, $14.4 billion would finance a vast array of much-needed public services in Alberta. In fact, it would take only $6.8 billion to cover the deficit, still leaving Alberta with a $7.6 billion tax advantage over Ontario. Alberta remains the only province without a provincial sales tax.

In sum, this is the Jason Kenney government’s second consecutive budget in which inflation and population growth are doing much of the heavy lifting. Deep cuts to post-secondary education, the Seniors Drug Program and housing, along with a large number of anticipated public sector job cuts, should give all Albertans cause for concern.

---

Nick Falvo is a Calgary-based research consultant, a research associate at the Carleton University Centre for Community Innovation, and a CCPA research associate. He thanks Bob Barnetson, Fiona Clement, Susan Falvo, Trevor Harrison, Neil Hepburn, Colleen Huston, Martina Jileckova, Mel McMillan, Ron Kneebone, John Kolkman, Katelyn Lucas, Rick Mueller, Katie Raso, Angela Regnier, Barb Silva, Garry Sran, Lee Stevens, D’Arcy Walsh, Sarah Woodgate and one anonymous source for assistance with this blog post, but any errors are the author's alone.

[1] Own-source revenue can also include ‘left over’ money in school boards’ reserves.

[2] The Calgary Housing Company estimates having to close approximately 100 units in 2020 due to insufficient funding.