Fluctuating revenues lead to cuts when oil prices decline

In industries such as oil and gas, revenues can fluctuate, sometimes wildly, with the ebbs and flows of the market.

For a province such as Alberta, whose revenue is heavily based on the oil and gas industry, such fluctuations are a major problem because the need for that money doesn’t fluctuate. The need to fund areas such as health care and education is constant.

It’s for that reason that Public Interest Alberta is campaigning to push the province to fix a revenue system it says is broken.

The organization is touring the province, holding town hall meetings – including one in Lethbridge tonight at 7 p.m. at Southminster United Church – to let Albertans know the province does have options for generating revenue that could eliminate the need for cuts.

Public Interest Alberta points out the province still has about $10 billion in rainy-day savings in the Heritage Trust Fund. The organization also says Alberta – the only province still using a flat tax – would be better served by switching to a progressive tax system which could generate up to extra $2 billion in revenue.

Alberta also overspent by $900 million on its energy stimulus drilling program which provides subsidies for the oil and gas industry.

The extra money in government coffers would come in handy now with school districts facing the prospect of budget shortfalls for next term.

“It’s obviously well know that there’s $100 million that’s been cut out of the education budget even though they’re looking at an additional 6,000 children from K to 12 going into our system next year,” says Bill Moore-Kilgannon, executive director of Public Interest Alberta, which is helping to spearhead the “Join Together Alberta” campaign which demands Alberta change to a more consistent revenue model.

Moore-Kilgannon notes post-secondary institutions are also facing tough times because the zero per cent increase in their operating budgets the past two years effectively amounts to a cut because operating costs have risen.

He’s right when he says the need for health care, education and care for seniors doesn’t rise and fall with the price of oil, and that cuts made today ultimately wind up producing greater costs down the road. That doesn’t include the social costs in terms of hardship for Albertans who rely on these services.

There’s no need for Albertans to have to endure such hardship. We are fortunate to live in one of the “have” provinces; maintaining services essential to Albertans shouldn’t be as difficult as it has become.

“Alberta is one of the wealthiest places in the world, blessed with an abundance of extremely valuable natural resources – and yet our government has manufactured a financial crisis that is likely to see 1,200 teachers laid off in the next few months and a still to be determined number of vital educational support staff,” Gil McGowan, president of the Alberta Federation of Labour and co-chair of the JTA campaign, said in a news release at the campaign’s launch. “Our education system is experiencing the same kind of chaos that has been inflicted on our health-care system, and that pain is also being felt in post-secondary education and in social services struggling to help vulnerable Albertans.”

A more sustainable revenue system could ease that pain.

Lethbridge Herald, Thurs Jun 16 2011