A new report by the Fraser Institute says Texas is proof that Alberta’s deficits and debt are largely the result of “undisciplined spending” not just a drop in energy prices.
“Successive Alberta governments mismanaged public finances when times were good and now those poor decisions have come back to haunt the province,” said Ben Eisen, the Fraser Institute’s director of provincial prosperity studies and co-author of One Energy Boom, Two Approaches: Fiscal Restraint Has Left Texas in Better Shape than Alberta.
“Texas, on the other hand, was more fiscally prudent and is now on a much better financial footing.”
Scroll down to read the full report.
The report compares both regions, acknowledging they’re both “heavily reliant on energy resources.”
However, it says the State of Texas controlled spending during the energy boom from 2004 to 2014 and ran five straight surpluses between 2009 and 2013. It says Alberta, on the other hand, increased spending at a faster rate than Texas, running four deficits during that same five-year period.
The study found during the energy boom, Alberta’s per-person program spending jumped 49 per cent, compared to 37.3 per cent in Texas. In 2004 and 2005, per-person spending in Alberta was 68.4 per cent higher than in Texas. By 2013 and 2014, Alberta’s spending was 82.8 per cent higher.
“Because Alberta’s public finances are so reliant on the energy sector-which is prone to booms and busts – it’s especially important for governments to manage spending prudently in good times to prepare for future downturns,” study co-author Steve Lafleur said.
“During the oil boom, Texas lawmakers were more fiscally prudent and now that state has a much brighter fiscal outlook than Alberta.”
Texas has maintained a steady level of debt, which is not forecast to increase its debt load as the oil price collapse continues. Alberta doesn’t expect to balance the budget again until at least 2024.
In a statement to Global News, Leah Holoiday, spokesperson for the Ministry of Finance, said:
“We agree that during the period from 2004 to 2014 when oil reached a peak of over $100 per barrel, the former PC government did little to control spending, set aside money in the Heritage Fund or to diversify the economy.
“By contrast, we have worked to keep spending increases well below those of the former government, maintain services like healthcare and education and diversify the economy to reduce the impact of the oil price roller coaster.”
The Fraser Institute describes itself as an independent, non-partisan Canadian public policy think-tank.
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