Alberta spends $2,700 more per person than B.C. yet collects $1,300 less tax
A tale of two budgets: British Columbia balances books while Alberta still staring at massive deficit
The Alberta government spends nearly $2,700 more per man, woman and child in the province compared to British Columbia, while collecting roughly $1,300 less in tax.
That's according to the latest budget estimates from each province and the most recent federal census data.
With nearly 4.1 million residents, Alberta is now only about half a million people shy of B.C.'s population.
And while the neighbouring provinces are increasingly comparable in size, their balance sheets are strikingly different.
Alberta expects to spend about $4.7 billion more than B.C. in the current fiscal year while collecting $8 billion less in revenue.
That discrepancy is why B.C. has been running budget surpluses while Alberta faces a deficit of more than $10 billion.
What if Alberta spent like B.C.?
The opposition Wildrose seized on the NDP government's fiscal update this week, noting how relatively frugal Alberta's neighbours to the west are being.
"If Alberta spent the same levels on government as British Columbia, the deficit would be significantly reduced or eliminated," the party said in release.
And they're right, at least in theory.
At B.C.'s spending rate of $10,560 per person, Alberta's expenses for this fiscal year would total $42.9 billion.
Coincidentally, Alberta's projected revenue for this year is also $42.9 billion.
Of course, suddenly slashing Alberta's budget to that level would require drastic measures — such as cutting health spending in half or completely eliminating the departments of post-secondary education, children's services and community and social services.
And, when it comes the Alberta-B.C. budget discrepancy, there is another factor at play.
B.C. collects nearly $1,300 more tax per person
While the Alberta government spends more than its B.C. counterpart, it also collects less tax.
A lot less tax.
Including health premiums, the B.C. government will bring in about $29.4 billion through its various forms of taxation this fiscal year, compared to $20.5 billion in Alberta.
On a per-capita basis, that works out to $6,334 per person in B.C. versus $5,052 in Alberta.
Alberta makes up a lot of that gap from other revenue sources, however, especially its investment income, which amounts to $710 per person — nearly triple B.C.'s rate.
Resource revenue projections were up also significantly in Alberta's third-quarter fiscal update and now total $597 per person, compared to $551 in B.C., where forestry makes up a big chunk of that file.
Still, Alberta's resource revenues are a far cry from a decade ago, during the oil-and-gas boom.
In the 2005/06 fiscal year, they amounted to $4,360 per person.
It may also surprise many Albertans to learn that they now receive more, per capita, in transfers from the federal government than their neighbours to the west — about $215 more, to be precise.
That includes half a billion in special federal aid related the Fort McMurray wildfire, but even if you take that out, Albertans are getting about $90 more per person than British Columbians from Ottawa this year.
Alberta spends 25% more per capita
Overall, Alberta spends 25 per cent more, per person, than B.C but the discrepancy varies by government function.
Health spending — the largest single expense for all provinces — is about 20 per cent higher in Alberta, at $5,084 per person compared to $4,242 in B.C.
The biggest difference, though, is in education.
For every man, woman and child in the province, Alberta spends $1,978 on elementary and secondary schooling.
That's 43 per cent higher than the rate in B.C. — but it's important to note that Alberta has more school-aged children.
According to population estimates from Alberta Health, there are roughly 747,000 residents between the ages of 5 and 19 in the province. That's 18.4 per cent of the entire population.
In B.C., by contrast, there are an estimated 726,000 residents in that same age range, or 15.6 per cent of the population.
In terms of spending per school-aged child, Alberta's rate is 22 per cent higher than B.C.'s.
Higher wages, higher costs
To a certain extent, it's to be expected that running a government in Alberta would cost more than in B.C., according to Trevor Tombe, an economist at the University of Calgary.
"We do have higher wages in Alberta than in B.C. — quite a bit higher — so that will make it more expensive for governments at all levels here to operate, because it's that much more expensive to hire staff," he said.
"I'd say that's a symptom of a good problem to have. A province with a strong private sector that has high wages will just naturally lead labour costs in government to be higher. But that doesn't fully account for it."
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Albertans' average weekly earnings have been on the decline in recent years but remain about 20 per cent higher than those of British Columbians.
Still, Tombe said public sector compensation only makes up about half of the Alberta government's total spending, so there are other factors driving up the province's costs relative to B.C.
He noted the gap in health expenses, in particular, because Alberta's "substantially younger population" would typically result in lower health costs, all other things being equal.
"If you do an adjustment for the demographic and gender distribution in B.C. versus Alberta, we ought to be spending even less, so it makes the differential between us and them that much greater," Tombe said.
Ceci: 'I'm not going to apologize'
Finance Minister Joe Ceci told CBC News Alberta's economy is beginning to turn around and stood by his government's decision not to slash spending.
"I'm not going to apologize for not putting Albertans at risk through this downturn by cutting deeply into programs and services," Ceci said.
"That's been done before … it didn't work. People suffered. We got behind on infrastructure investments. We're not doing that."
Ceci said Alberta's revenue stream has been "too narrowly focused" on oil and gas royalties and that needs to change over the medium-to-long term.
"Diversifying the economy critical for us to move forward," he said.
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