The budget includes money that comes in (revenue) and money that goes out (expense). Alberta's annual budget is based on an April 1 to March 31 fiscal year. In addition to the budget, government produces quarterly updates and an annual report to report back to Albertans on the government's accomplishments and fiscal performance.
The government receives revenue from:
- resource revenue like oil and natural gas royalties
- transfers from the federal government
- income from investments
- revenue from other taxes
- fees on specific products and services
Expense includes all of the programs and services the government provides for Albertans, from supporting people with disabilities to funding school board operations to running a hospital. It also includes staffing costs for people to provide these services.
Balanced, surplus and deficit budget
A budget is balanced if revenue and expense is equal.
If revenue is greater than expense, that's called a surplus. A government can choose to spend more, put the money into savings or pay down debt.
If expense is greater than revenue, this is called a deficit.
When in a deficit position, cutting spending, raising taxes and fees and using savings are all ways for government to cover the difference between expense and revenue.
The government may also choose to borrow money to fund programs or to finance large projects. Deficit financing is a way to get needed infrastructure built faster.
Low interest rates and Alberta's high credit rating means government can borrow money at a reasonable rate of interest, which reduces the cost of borrowing.
Factors that affect budget
Each budget year presents a different challenge for the government, depending on many outside factors including:
- changing economic conditions and volatile resource prices make it difficult to precisely predict the province's total revenue
- public priorities may change every year – research and feedback from Albertans help identify these shifting priorities
Alberta continues to experience strong population growth above the national average. Alberta's population is expected to increase by 1.3% in 2017-18, reaching an estimated 4.3 million people. As Alberta grows, so too does the need for schools, health facilities, roads and programs and services.
Budget preparation and introduction
Each ministry outlines how much money they need to support the programs and services they provide to Albertans. Albertans are also consulted on what programs and services are important to them. Proposals and needs are discussed, and the budget is drafted.
The President of Treasury Board and Minister of Finance introduces the draft budget to the Legislature for debate. Members of the Legislative Assembly vote to pass an Appropriation Bill, which grants the government the authority to carry out its fiscal plan (the budget). To become law, the Bill must be approved by the Assembly and must receive Royal Assent - when the Lieutenant Governor signs it.
Funding for emergencies is over and above what is included in the budget. Funding for these unexpected events are voted on separately in the legislature when needed.