The Albertan government has updated its fiscal projections for fiscal year 2024-25, showing an almost sevenfold increase in the projected surplus, rising by over $2.5 billion. That means the province will need to borrow one-fourth of the expected amount of cash to achieve its goals.
The initially forecasted $367 million surplus for the fiscal year was overshadowed by big borrowing when the 2024 provincial budget was announced.
The original budget estimated that the Alberta government would have to borrow around $2.4 billion in taxpayer-supported debt to fund operations, which has now fallen by over $1.7 billion to $0.6 billion.
The province updated its projections on Thursday, now forecasting a surplus of $2.9 billion by the end of 2024-25, thanks partly to higher oil prices than initially expected.
“With a stronger surplus than projected at budget, the government continues to invest in the needs of Albertans while managing its debt and saving for the future,” reads the release.
The surplus explosion comes despite Alberta’s population being projected to increase by 4.6% in 2024. Alberta’s population has been increasing at rates not seen since the 1980s, as they continuously lead the country by a large margin in interprovincial migration.
While the population is projected to surge, so too is inflation, by 3%, and real GDP by 3.3%.
“People across the country see a bright future for Alberta, and they continue to come here in record numbers. While this population growth is creating challenges and putting pressure on our hospitals, schools, and other services, our prudence and discipline are helping to manage these challenges,” said Finance Minister Nate Horner.
Alberta received credit rating upgrades from four different major credit rating agencies over the last year, most recently having its long-term credit rating bumped from AA- to AA by Fitch Ratings.
The province’s record $9.3 billion spending on its education system in 2024-25 saw an additional $215 million allocated in July to address the population boom.
The Albertan government also dolled out $573 million so far due to the Jasper wildfires. $550 million was invested to help fight the wildfires, $10 million to match donations from the Canadian Red Cross, and $13 million has been provided to evacuees in emergency evacuation payments.
Despite the additions in funding, the expense forecast has only increased by $101 million since the budget was announced, now totalling $73.3 billion. Over $1.4 billion remains in the contingency fund.
Conversely, expected revenue has shot up $2.7 billion since the budget was announced.
Population gains and a strong labour market have increased personal income tax revenue by $458 million. Higher oil prices have seen non-renewable resource revenue jump from $2.5 billion to $19.8 billion. Other tax revenues fell $38 million thanks to less tobacco revenue and the province capping insurance rates for “good drivers.”
The province will invest $2 billion of its surplus cash into the Alberta Heritage Savings Trust Fund, which recently grew to $23.4 billion after earning a 2.1% return of $509 million in the first quarter. The province aims to grow the fund to between $250 billion and $400 billion by 2050 to decrease its reliance on natural resource revenue.
A spokesperson for Horner told True North that Alberta faces challenged due to its population growth.
“We are working on bringing in the personal income tax cut hopefully by the next budget so Albertans can keep more in their pockets each year,” said the spokesperson. “Right now, we are working hard on the budget to make that possible and will have more to say on that in the coming weeks.”
The province projects taxpayer-supported debt to fall $1.7 billion from the budget’s projections, reaching $86.1 billion as of Mar. 31, 2025. Debt servicing costs will be $3.2 billion, a decrease of $181 million from the budget thanks to the new surplus.
Half the $7.3 billion in surplus cash will be used to pay debt, with $1.8 billion paid in 2023-24 and $1.9 billion repaid in the following year.
“While the province remains committed to paying down the debt and saving for the future, after adjustments to the operating surplus, Alberta forecasts it will be in a cash deficit at the end of 2024-25 and will need to borrow $0.6 billion,” concluded the release.