A van and car succumb to the raging torrent of the Elbow River flooding waters in Calgary Saturday. Photo: Neil Young, nyphotos.ca.
Multi-billion hole in next five years’ budgets due to Alberta flood
It’s nowhere near soon enough yet to know what the final bill will be for the June Alberta flood. But we do know the Alberta budget is not in great shape to handle the extra expense.
From right: Prime Minister Stephen Harper, Alberta Premier Alison Redford, Calgary Mayor Naheed Nenshi, staff member providing brief on flood efforts. Photo: Facebook/Alison Redford.
This year, three-quarters of a billion dollars has already been spent in emergency services and remediation after the floods. That’s money that’s “out of plan” and thus adding to the pre-existing deficit.
No one knows yet how much may come from the federal government, and in what years. No one knows yet how much individual municipalities will be expected to bear. No one even knows what the political price of saying “no” might be, yet no government can write a blank cheque, either.
The Alberta flood waters crested in late June, 2013, but the bills won’t crest until two to three years from now, then taper down back to “normal” somewhere around the fifth year, or 2018.
Alberta’s next election, in other words, will be fought right around the time the highest level of outflows to repair and replace after the Alberta flood is flowing out of the Treasury.
The Bow River has overtaken the St. Patrick’s Island pedestrian bridge construction site. Several ATCO trailers are only being stopping from floating away by the trees that are still standing around them.
Between now and then, the opposition Wildrose Alliance, Alberta’s other political parties, and indeed some of Alison Redford’s own PC party caucus will be having a field day over it all.
Take money from other programs to try and keep the deficits to reasonable numbers? They’ll be championed — and goodness knows it’s not like Alberta doesn’t have other issues, from health care, to missing and needed infrastructure, to education, to a host of other services, that don’t already have demands that are going unmet.
But letting the deficit skyrocket so that everything gets done at once isn’t likely to be much help either, since the charge then will be fiscal ineptitude, especially as rising global interest rates force the cost of debt servicing higher even as the size of that debt grows. That’s a double whammy to the budget each year thereafter.
Watching the world price for oil come down when the UK Parliament gave British Prime Minister David Cameron the metaphorical finger and voted down intervening in Syria wasn’t exactly good news, either, since one of the few bright spots from a provincial budget point of view might be royalties running higher than forecast.
Calgary was hard hit by the Alberta flood, but the pain will continue for 5 years as Albertans pay for clean up and repair.
Of course, at the prices that are required to make a difference, the economy of Canada and the United States, Alberta’s primary market, stalls completely and the continent goes back into recession (or deeper into it, if you’re one of those who thinks we never quite broke free after 2008 slammed us).
Alberta has run deficits now for six years. Its current fiscal mess isn’t a result of the Alberta flood.
It’s a result of an inability to make the case for either saying “no” to the extra spending, or for the taxes needed to fund it, in the years past.
If Alberta still had its debt retired, its Heritage and Sustainability Funds in healthy shape (they’ve been repeatedly raided for cash to make deficits look better than they were), and had a balanced budget going into June’s disaster, it could sustain the temporary bout of red ink nicely.
Don’t argue that “Alberta’s in better shape than those Easterners.” Yes, it is. So what? It’s a difference of degree, not a difference of kind.
But in all the noise over the next three years about this program not being funded as well as a proponent would like, or the screams about how high the deficit and debt service costs are going, you’re unlikely to hear anyone speak up for the real problem.
When times were good, Albertans spent like drunken sailors, rather than living within the means they had set out to pay for their services. They also rewarded those governments with re-election, in effect saying “I’m fine with this”.
Now that times are toughening up, Albertans — like everyone else — get to face the consequences.
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