What Changed in Alberta from the Fall 2021 Mid-year Update to Budget 2022

Summary

• Alberta’s provincial government is experiencing a windfall from resource revenue. According to Budget 2022 (released February 24, 2022), total nominal revenue from 2021/22 through 2023/24 will be $17.0 billion higher than projected in the 2021-22 Mid-year Fiscal Update (released November 30, 2021) excluding COVID-related revenue. Of that increase, total nominal resource revenue accounts for $9.4 billion (or 55.3 percent).
• When resource revenue is relatively high, the provincial government faces added pressure to increase spending. Excluding COVID-related measures, Alberta’s Budget 2022 increased projected nominal program spending by $5.7 billion (over the three-year period) since the 2021 mid-year update.
• Some of the increase in total program spending can be explained by the expectation that inflation rates and population growth rates will be higher. Of the total $5.7 billion increase in total program spending, $1.7 billion or 30.5 percent can be explained by the expected higher rates of inflation and population growth.
• That means that $4.0 billion of the increase in program spending from mid-year 2021 to February’s Budget 2022 was above and beyond anything linked to changes in expected inflation or population growth.
• Put simply, the provincial government used higher revenues to increase spending at the expense of paying down debt, reducing taxes, or saving.