Regulatory Announcement
Province of Alberta
To view the document in PDF format, please paste the following URLs into the address bar of your browser.
http://www.rns-pdf.londonstockexchange.com/rns/6828X_-2012-2-17.pdf
The Province's Third Quarter Fiscal Update has been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do.
For further information, please contact:
Hilary McVey
Senior Manager, Corporate Finance
Alberta Finance
Edmonton, Alberta
Telephone Number: 1-780-415-9198
Fax Number: 1-780-427-2435
Email: hilary.mcvey@gov.ab.ca
Alberta Budget 2011 Building a better Alberta
Third Quarter Fiscal Update
2011-2012
Government of Alberta
February 2012
UPDATING ALBERTANS
The Third Quarter Fiscal Update consists of two parts: the updated 2011-12 forecast for the entire fiscal year and the actual
results for the first nine months of the fiscal year (April 1 to December 31, 2011).
TABLE OF CONTENTS
2011 -12 FORECAST
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fiscal Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alberta Sustainability Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expense by Ministry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Capital Plan Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Capital Grants and Other Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Capital Investment and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net Financial and Capital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Tables
Cash Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Disaster/Emergency Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2011-12 Fiscal Year Assumptions and Sensitivities . . . . . . . . . . . . . . . . . . . . . . . 10
Financing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ACTUAL RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated Fiscal Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Budget 2011 • Third Quarter Fiscal Update
1
Deficit. Forecast at $1.3 billion, $2.1 billion lower than
the Budget 2011 estimate, and $1.7 billion lower than
forecast at second quarter, mainly from an improved
revenue forecast. The deficit is offset by a transfer from the
Sustainability Fund.
Revenue. Forecast at $38.3 billion, an increase of
$2.7 billion from budget and $1.5 billion from second
quarter. The increase from budget is due mainly to higher
Crown (Other OTC: CWLDF.PK - news) land lease sales, corporate income tax and royalty
revenue, partly off set by lower investment income.
Expense. Forecast at $39.6 billion, a net increase of
$642 million from budget, but $218 million lower than
the second quarter forecast. The increase from budget
is mainly due to disaster / emergency assistance for
wildfires and municipal flooding, higher capital grants
and education funding. The decrease from second quarter
primarily reflects re-profiling of capital grants to future
years, reduced requirements in various health programs
and lower debt servicing costs. Total (Other OTC: TTFNF.PK - news) expense is net of
expected in-year savings of $240 million.
Sustainability Fund. Forecast assets at March 31, 2012 of
$7.5 billion, $2.2 billion higher than the budget estimate
and $0.6 billion lower than second quarter. The higher
balance is due primarily to the lower deficit and the
$619 million in cash from 2010-11 fourth quarter results
transferred after March 31, 2011 (i.e., in the 2011-12
fiscal year), partly offset by higher net cash requirements,
including the impact of not borrowing the planned
$1.8 billion for capital purposes (see page 9 for details).
2011-12 FORECAST
HIGHLIGHTS
FISCAL SUMMARY a
(millions of dollars)
a Subject to the Fiscal Responsibility Act. Does not include revenue and expense of Crown-controlled SUCH sector organizations or Alberta Innovates
corporations, or changes in pension liabilities.
b Budget revenue has been restated, increasing by $11 million as a result of Alberta Treasury Branches adopting International Financial Reporting Standards.
This reduces the Budget deficit by $11 million, but also increases ATB retained income by $8 million and other cash adjustments by $3 million.
c Capital investment (not included in expense) 2,737 2,315 (422) (507)
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Revenue b 3 5,600 3 8,318 2 ,718 1,517
Expense c
Program expense
Operating expense 3 3,943 3 3,994 5 1 (54)
Capital grants 3 ,895 3 ,981 8 6 (99)
Disaster / emergency assistance - 5 95 5 95 9
Capital amortization / nominal sum disposals 8 08 7 97 ( 11) (17)
In-year savings ( 240) ( 240) - -
Debt servicing costs 5 88 5 09 ( 79) (57)
Total Expense 3 8,994 3 9,636 6 42 (218)
Surplus / (Deficit) ( 3,394) ( 1,318) 2 ,076 1,735
Cash Adjustments - (requirements) / sources
Retained income of funds and agencies b ( 890) ( 938) ( 48) (157)
Capital cash adjustments ( 1,018) ( 1,290) ( 272) (1,316)
Other cash adjustments b ( 598) ( 803) ( 205) (868)
Net Cash Adjustments (2,506) (3,031) (525) (2,341)
Net Cash Requirements (Deficit + Net Cash Adjustments) ( 5,900) ( 4,349) 1 ,551 ( 606)
Alberta Sustainability Fund
Balance at Start of Year 1 1,192 1 1,192 - -
4th quarter results transferred after March 31, 2011 - 6 19 6 19 -
Transfer to offset cash-adjusted deficit ( 5,900) ( 4,349) 1 ,551 (606)
Balance at End of Year 5 ,292 7 ,462 2 ,170 ( 606)
2011-12
At March 31
Change from
Budget 2011 • Third Quarter Fiscal Update
2
REVENUE
NON-RENEWABLE RESOURCE REVENUE
Resource (Shenzhen: 399319.SZ - news) revenue is forecast at $11.3 billion, an
increase of $3 billion from the Budget 2011 estimate and
$1.1 billion from the second quarter forecast, primarily
due to Crown land lease sales and higher oil prices.
Royalty revenue has been negatively impacted by the
higher US-Canadian dollar exchange rate, now forecast to
average US$1.003/Cdn$, 1.92¢ higher than the budget
estimate. Year to date (April to January), the exchange rate
has averaged US$1.007/Cdn$.
Bitumen royalties. Forecast at $4.4 billion, an increase of
$232 million from the budget estimate and $439 million
from the second quarter forecast. Higher oil prices have
more than off set lower-than-forecast production and
higher costs. Th e WCS @ Hardisty price is forecast to
average Cdn$77.98 per barrel, $5.96 higher than budget.
Conventional oil royalties. Forecast at $2.2 billion, an
increase of $274 million from budget and $505 million
from second quarter, due mainly to higher oil prices and
production from horizontal wells. Oil prices are forecast to
average US$96.25 per barrel for the fi scal year, US$6.85
higher than estimated in Budget 2011. Year to date (April
to January), oil prices have averaged US$95.78 per barrel.
Natural gas royalties. Forecast at $1.2 billion, an
increase of $203 million from the budget estimate and
$210 million higher than second quarter. Th e Alberta
Reference Price (ARP), used to calculate natural gas
royalties, is forecast to average Cdn$3.11 per gigajoule for
the fi scal year, 34¢ lower than budget. Year to date (April
to November (Stuttgart: A0Z24E - news) ), the ARP has averaged $3.29. Th e impact
on revenue from lower prices has been more than off set by
higher-than-expected production and by-product prices.
Revenue from bonuses and sales of Crown leases is
forecast at $3.3 billion, an increase of $2.2 billion from
the budget estimate, due to higher bid prices and numbers
of hectares sold, including a record land sale totalling
$842 million on June 1, 2011.
TAX REVENUE
Personal income tax revenue is forecast at $8.4 billion,
a decrease of $286 million from the budget estimate, due
to lower-than-expected 2010 tax assessment data. Th is
reduces the base used to forecast revenue for 2011 and
subsequent years, and also requires a negative prior years'
adjustment of $188 million, as reported 2010-11 revenue
was too high. Th ese reductions to the forecast are partly
off set by a revised forecast of stronger growth in personal
incomes in 2011, refl ected in a $172 million increase in
forecast revenue from second quarter.
Corporate income tax revenue. $3.9 billion, an increase
of $339 million from budget and $38 million from second
quarter, due to higher forecast of corporate profi ts.
Education property tax. Forecast at $1.7 billion, an
increase of $21 million from the budget estimate, as a
result of the decision to freeze 2012 rates at 2011 levels.
Other tax revenue is forecast at $2.3 billion, $45 million
higher than estimated in Budget 2011, mainly from
higher-than-expected fuel consumption.
TRANSFERS FROM GOVERNMENT OF CANADA
Federal (SES: E1:F20.SI - news) transfers are forecast at $4.7 billion, a decrease
of $41 million from budget. A $96 million reduction in
the Canada Health Transfer (CHT (SES: C36.SI - news) ), due mainly to an
increase in Alberta's proportion of total national corporate
tax assessments, is partly off set by increases of $19 million
for labour market and agriculture support programs
and of a net $36 million mainly for aff ordable housing,
transportation and other capital projects. Th e $12 million
decrease from second quarter is mainly due to re-profi ling
of projects to future years, partly off set by higher CHT
revenue from an increase in the total national transfer and
a higher population share.
INVESTMENT INCOME
Investment income is forecast at $1.5 billion, a decrease of
$431 million from the Budget 2011 estimate, due mainly
to the impact of weak global equity markets on Heritage
Fund and endowment fund income. Th is is partially off set
by increased Sustainability Fund income due to the higher
balance and gains on sales of fi xed-income assets created by
current low interest rates. Th is is primarily why investment
income has increased $60 million from second quarter.
OTHER REVENUE
Revenue from other sources is forecast at $4.5 billion,
$115 million higher than budget:
• $10 million net increase in AGLC net income, due to
lower-than-expected amortization expense, partly off set
by lower revenue from liquor sales;
• $18 million increase in net income of Alberta Treasury
Branches, primarily due to lower credit loss expense;
• $21 million net decrease in premiums, fees and licences
revenue mainly from reversing the budgeted increase
in municipal motor vehicle search fees, and to lower
participation in agriculture insurance programs;
• $108 million net increase in other revenue, mainly
related to land sales, Canada Health Infoway funding
and reversing prior-year expense accruals.
Budget 2011 • Third Quarter Fiscal Update
3
REVENUE
(millions of dollars)
3rd
Quarter 2nd Main Reasons for
Budget Forecast Budget Quarter Change from Budget
Income Taxes
Personal income tax 8 ,693 8,407 (286) 172 Lower prior-year assessment data
Corporate income tax 3 ,608 3,947 339 38 Increased forecast for corporate profits
12,301 12,354 53 210
Other Taxes
Education property tax 1 ,634 1,655 21 21 Impact of freezing 2012 tax rates
Tobacco tax 9 10 910 - -
Fuel tax 7 95 830 35 35 Higher-than-expected consumption
Insurance (Euronext: SIN.NX - news) taxes 3 22 318 (4) 1 Forecast revised based on 2010 cash receipts
Freehold mineral rights tax 1 42 150 8 1 Higher oil price
Tourism levy 63 69 6 4 Higher hotel rates and stays
3 ,866 3,932 66 62
Non-Renewable Resource Revenue
Bitumen royalty 4 ,123 4,355 232 439 Higher oil price
Crude oil royalty 1 ,925 2,199 274 505 Higher oil price
Natural gas and by-products royalty 1 ,022 1,225 203 210 Higher production / by-product prices
Bonuses and sales of Crown leases 1 ,068 3,304 2,236 (22) Higher prices per hectare and more hectares sold
Rentals and fees 1 41 168 27 14 More hectares sold
Coal royalty 42 26 (16) (4) Lower mine profitability
8 ,321 11,277 2,956 1,142
Transfers from Government of Canada
Health (Euronext: IXSHL.NX - news) transfers 2 ,302 2,206 (96) 42 Higher proportion of national corporate tax assessments
Canada Social Transfer 1 ,260 1,260 - (1)
Agriculture support programs 2 87 296 9 (1) AgriRecovery disaster assistance / insurance premiums
Labour market agreements 1 71 181 10 (3) Funding from 2010-11
Other 7 48 784 36 (49) Re-profiled 2010-11 / additional capital projects
4 ,768 4,727 (41) (12)
Investment Income
Alberta Heritage Savings Trust Fund 1 ,050 480 (570) 8 Weak equity markets
Endowment Funds 1 98 65 (133) (19) Weak equity markets
Alberta Capital Finance Authority 2 42 244 2 2 Higher loan volume
Sustainability Fund 2 25 495 270 65 Higher balance / gains on asset sales
Agriculture Financial Services Corporation 1 15 110 (5) 5 Higher-than-expected loan repayments in prior years
Debt Retirement Account 26 36 10 (1) Higher returns
Other 71 66 (5) - Lower balances
1 ,927 1,496 (431) 60
Net Income from Commercial Operations
Alberta Gaming and Liquor Commission
Gaming and lottery revenue 1 ,388 1,423 35 35 Lower amortization from delay in VLT replacement
Liquor revenue 7 18 693 (25) (25) Lower sales volume
Alberta Treasury Branchesa 1 88 2 06 1 8 (6) Reduction in provision for credit losses
Other 24 25 1 - Higher CUDGCo net income
2 ,318 2,347 29 4
Premiums, Fees and Licences
Motor vehicle licences 4 31 412 (19) (7) Rescinding of municipal search fee increase
Crop and hail insurance premiums 2 97 284 (13) (2) Lower participation due to higher commodity prices
Energy Resources Conservation Board levies 1 25 125 - -
Land titles 66 75 9 9 Stronger real estate market
Land and grazing 63 66 3 3 Higher public land disposition charges
Supplementary health benefits premiums 58 58 - 1
Other a 3 56 355 (1) (3) Lower timber prices
1 ,396 1,375 (21) 1
Other
AIMCo investment management charges 1 31 141 10 6 Increase in external investment management fees
Fines and penalties 1 17 122 5 1 Corporate fine
Refunds of expense 1 12 135 23 8 Recovery / reversal of prior-year expense
Climate Change and Emissions Management 68 68 - -
Miscellaneous 2 75 344 69 35 Canada Health Infoway / land sales
7 03 810 107 50
Total Revenue 35,600 38,318 2,718 1,517
2011-12
Change from
a Budget revenue has been restated as a result of Alberta Treasury Branches (ATB) adopting International Financial Reporting Standards. This increases ATB net
income by $8 million and payment-in-lieu of taxes by $3 million (in "Other Premiums Fees and Licences").
Budget 2011 • Third Quarter Fiscal Update
4
EXPENSE
TOTAL EXPENSE
Total expense is forecast at $39.6 billion, $642 million
higher than estimated in Budget 2011, but $218 million
lower than second quarter. Changes from budget are:
• $595 million in disaster/emergency assistance;
• $86 million increase in capital grants;
• $51 million increase in net operating expense (a net
$60 million increase partly off set by a net $9 million
decrease in dedicated revenue-operating expense);
• $79 million decrease in debt servicing costs;
• $11 million decrease in amortization expense.
Disaster/emergency assistance - $595 million increase
comprising $250 million for forest fi re-fi ghting costs,
$172 million for Slave Lake wildfi res, $105 million
for municipal fl ood assistance, $38 million for the
AgriRecovery response to excess moisture conditions and
$30 million to combat mountain pine beetle infestations.
Capital grants - $86 million increase, mainly for schools,
Slave Lake wildfi re recovery, aff ordable housing initiatives,
community projects and accelerated GreenTRIP funding,
partly off set by re-profi ling of projects to future years and
reduced health facility maintenance and other grants.
Operating expense - $51 million increase, mainly
for school board operations, physician compensation,
contracted agency lump sum payments to employees,
judicial compensation and student loan provisions, partly
off set by lower expense in health and agriculture programs.
In-year operating expense limit - Operating expense
increases, excluding those for dedicated revenue-operating
expense, are limited by the Fiscal Responsibility Act to 1%
of total budgeted ministry operating expense. In 2011-12,
the limit is $339 million. Net (Frankfurt: A0Z22E - news) increases as of third quarter
total $60 million.
MINISTRY EXPENSE CHANGES
Advanced Education and Technology - $38 million
increase comprising $30 million for provisions on student
loans and a net $18 million in capital grants, partly off set
by $10 million in savings in various program areas.
Agriculture and Rural Development - $18 million net
decrease. Increases of $30 million in capital grants for
the Agrium Western Event Centre and rural broadband
connectivity, $38 million in disaster assistance for
excess moisture conditions cost-shared with the federal
government, $22 million for Growing Forward and other
research initiatives and a net $7 million in income support
and other programs, are off set by decreases of $43 million
in insurance programs and $72 million from lower-thanreported
2010-11 AgriRecovery and AgriStability claims.
Education - $227 million increase. Capital grants are
$113 million higher, with $82 million for new schools,
modular classrooms and funding for maintenance and
$31 million being accelerated from 2012-13 with faster
construction of P3 projects. School board operating
grants are $123 million higher, restoring funding of
$107 million, and adding $13 million for student
transportation fuel costs and $3 million for teachers'
salaries. A net $9 million decrease relates mainly to lower
sales from the Learning Resources Centre.
Health and Wellness - $138 million decrease, with lapses
of a net $187 million in drugs and supplemental benefi ts,
information systems and other programs, and reductions
of $31 million mainly in vaccine consumption and
re-profi led capital grants, partly off set by an $80 million
volume-driven increase for physician compensation.
Infrastructure - $127 million decrease. Capital grant
reductions of $100 million, to permit Alberta Health
Services to employ cash provided in prior years, and of
$47 million in other reductions, mainly related to Capital
for Emergent Projects funding transfers and re-profi ling,
are partly off set by $20 million in increases mainly due to
a one-time write-off of project planning costs previously
included in assets.
Municipal Aff airs - $326 million increase, consisting of
$172 million in wildfi re disaster support and $14 million
in capital grants for Slave Lake, $105 million for fl ood
disaster support, $20 million for aff ordable housing and
$15 million in other municipal capital grants.
Seniors - $34 million increase, comprising $17 million
for contracted agency lump sum payments to employees,
$11 million for AISH caseload and PDD cost pressures
and $6 million for seniors' housing.
Sustainable Resource Development - $286 million
increase, comprising $280 million to fi ght forest fi res and
mountain pine beetle infestations and a net $6 million
mainly for capital grants to Alberta land trusts.
Transportation - $60 million increase refl ects re-profi ling
$80 million in GreenTRIP grants from 2012-13 and
purchasing $15 million in highway maintenance materials,
partly off set by $35 million in net decreases, mainly lapses
from cost savings on federally-funded projects.
Other Ministries - $32 million net increase, consisting
mainly of increases for judicial compensation, child care
subsidies, labour market and Travel Alberta initiatives,
partly off set by re-profi ling of projects to future years.
Debt servicing costs - $79 million decrease, mainly due
to the decision to not borrow the planned $1.8 billion for
capital purposes.
Budget 2011 • Third Quarter Fiscal Update
5
EXPENSE SUMMARY
(millions of dollars)
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Program Expense
Operating expense a 3 3,943 3 4,003 6 0 (62)
Dedicated revenue / operating expense net changes b - ( 9) ( 9) 8
Net operating expense 3 3,943 3 3,994 5 1 (54)
Capital grants 3 ,895 3 ,981 8 6 (99)
Capital amortization / nominal sum disposals 8 08 7 97 ( 11) (17)
In-year savings ( 240) ( 240) - -
Disaster / emergency assistance - 5 95 5 95 9
Total Program Expense 38,406 39,127 7 21 ( 161)
Debt Servicing Costs 5 88 5 09 ( 79) (57)
Total Expense 3 8,994 3 9,636 6 42 (218)
2011-12
Change from
a Prior to dedicated revenue / operating expense net changes.
b Dedicated revenue / operating expense changes - Agriculture and Rural Development: $27 million net reduction including a $41 million negative adjustment in federal
revenue for 2010-11 programs, $12 million in federal funding mainly for Growing Forward and Salmonella Enteritidis and $2 million industry research funding; Education:
$6 million net reduction primarily from Learning Resource Centre; Human Services: $6 million net increase, mainly federal labour market funding from 2010-11; Finance:
$12 million net increase primarily for investment management charges; net $6 million increase in other ministries.
EXPENSE BY MINISTRY a
(millions of dollars)
3rd
Quarter 2nd Main Reasons for
Budget Forecast Budget Quarter Change from Budget
Program
Legislative Assembly 1 11 1 18 7 4 Election preparations
Advanced Education and Technology 3,008 3,046 3 8 15 Capital grants / student loan provisions
Agriculture and Rural Development 975 957 ( 18) (11) Lower insurance costs
Culture and Community Services 218 242 2 4 3 Capital grants re-profiled from 2010-11
Education 6,152 6,379 2 27 ( 2) Operating support / capital grants to school boards
Energy (NYSEArca: JJE - news) 445 418 ( 27) (27) Carbon capture and storage capital grants re-profile
Environment and Water 289 278 ( 11) (25) Federal ecoTrust funding re-profile
Executive Council 30 30 - -
Finance 975 964 ( 11) (11) Lower teachers' pre-1992 pension plan payments
Health and Wellness 14,947 14,809 ( 138) (107) Lapses in drugs, IT systems and other programs
Human Services 2,416 2,441 2 5 7 Child care / 2010-11 federal labour market funding
Infrastructure 1,524 1,397 ( 127) (124) Health facility capital grants lapses
Intergovernmental, International
and Aboriginal Relations 172 174 2 2 First Nations Development Fund
Justice 496 524 2 8 28 Judicial compensation
Municipal Affairs 1,311 1,637 3 26 1 7 Slave Lake Wildfire Recovery / flood assistance
Seniors 2,107 2,141 3 4 18 Contracted agency employee lump sum payments
Service Alberta 300 296 ( 4) (4) Lower amortization expense from project re-profiling
Solicitor General and Public Security 682 685 3 3 Employee compensation adjustments
Sustainable Resource Development 293 579 2 86 - Forest fires / mountain pine beetle infestations
Tourism, Parks and Recreation 163 179 1 6 1 Travel Alberta / Calgary Stampede 2012 Centennial
Transportation 1,952 2,012 6 0 52 GreenTRIP grants re-profiled from 2012-13
Treasury Board and Enterprise 80 61 ( 19) - Capital planning funds transferred to other ministries
In-year savings ( 240) ( 240) - -
Total Program Expense 3 8,406 3 9,127 7 21 (161)
Debt Servicing Costs 588 509 ( 79) (57) Borrowing for capital purposes cancelled
Total Expense 3 8,994 3 9,636 6 42 (218)
2011-12
Change from
a Budget and second quarter numbers have been restated to refl ect the re-organization of government departments established by Orders in Council under the
Government Organization Act, on October 12, 2011, November 8, 2011 and January 20, 2012.
Budget 2011 • Third Quarter Fiscal Update
6
CAPITAL PLAN
2011-12 Capital Plan spending (capital grants and other
infrastructure support included in expense, and capital
investment in government-owned assets not included in
expense) is forecast at $6.3 billion, $336 million lower
than estimated in Budget 2011 and $606 million lower
than second quarter. Th is primarily refl ects re-profi ling
of projects to future years, partly off set by increases for
projects carried over from 2010-11, additional schools and
acceleration of GreenTRIP grants from 2012-13.
Municipal Infrastructure Support - $1.7 billion,
an increase of $70 million from budget. Th is includes
acceleration of $80 million in GreenTRIP grants from
2012-13, $14 million for Slave Lake support, $28 million
mainly for water and wastewater infrastructure, partly
off set by $52 million in lapsed federal funding.
Provincial Highway Network - $1.6 billion, a decrease
of $93 million from budget. Increases of $116 million
in projects carried over from 2010-11, $35 million
for twinning of Highway 63 and a net $41 million,
mainly to refl ect P3 work progress and for highway
maintenance materials, are more than off set by a decrease
of $285 million for projects re-profi led to future years.
Health Facilities and Equipment - $879 million, a
decrease of $143 million from budget, consisting of
reductions of $100 million in maintenance grants to
allow Alberta Health Services to employ cash provided
in prior years, $26 million for lower vaccine purchases,
information systems and planning and $17 million for
projects re-profi led to future years.
Schools - $402 million, an increase of $113 million
from budget, refl ecting $82 million in new schools,
modular classrooms and funding for maintenance (with
$12 million funded by a transfer from the Government
Facilities envelope) and $31 million re-profi led primarily
from 2012-13 due to faster-than-expected construction of
Alberta Schools Alternative Procurement P3 projects.
Post-secondary Facilities - $269 million, an increase of
$18 million from budget. A $22 million increase funded
by a transfer from the Government Facilities envelope is
partly off set by a $4 million transfer to operating expense.
Community Facilities - $132 million, an increase of
$12 million from budget, including $25 million for
the Agrium Western Event Centre funded by a transfer
from the Government Facilities envelope, off set by a net
decrease of $13 million for various projects carried over
from 2010-11 or re-profi led to future years.
Water and Wastewater Management - $308 million, an
increase of $11 million from budget, refl ecting $8 million
for dam repairs and project planning (primarily funded
by transfers from the Government Facilities envelope) and
a net $3 million for various projects re-profi led to future
years or carried over from 2010-11.
Housing - $321 million, an increase of $48 million from
budget. Increases of $30 million for Slave Lake interim
housing and $20 million for aff ordable housing funded by
a federal transfer are off set by a net decrease of $2 million
mainly due to re-profi ling projects to future years.
Government Facilities, Equipment and Other Capital -
$715 million, $372 million lower than budget. Increases
of $104 million for various projects carried over and
re-profi led from 2010-11 and a net $14 million in various
other projects are off set by decreases of $390 million in
projects re-profi led to future years and a net $100 million
in transfers to other Capital Plan envelopes and to
operating expense.
CAPITAL PLAN SUMMARY
(millions of dollars)
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Municipal infrastructure support 1,628 1 ,698 7 0 61
Provincial highway network 1,665 1 ,572 ( 93) (236)
Health facilities and equipment 1,022 8 79 ( 143) (112)
Schools 289 4 02 1 13 4
Post-secondary facilities 251 2 69 1 8 ( 4)
Community facilities 120 1 32 1 2 (16)
Water and wastewater management 297 3 08 1 1 (2)
Housing 273 3 21 4 8 (48)
Government facilities, equipment and other capital 1,087 7 15 ( 372) (253)
Total Capital Plan 6 ,632 6 ,296 ( 336) (606)
2011-12
Change from
Budget 2011 • Third Quarter Fiscal Update
7
a Capital grants and other support are included in expense. Other support includes project planning, accommodation and facility preservation expense. Ministries
not listed above have no capital grants or other support or the amount rounds to less than $1 million.
CAPITAL GRANTS AND OTHER SUPPORT a
(millions of dollars)
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Advanced Education and Technology 251 2 69 18 (4)
Agriculture and Rural Development 38 6 8 30 5
Culture and Community Services 48 7 0 22 1
Education 288 4 01 1 13 4
Energy 70 5 5 ( 15) (15)
Environment and Water 90 8 1 (9) (19)
Health and Wellness 59 4 5 ( 14) (4)
Infrastructure 948 8 01 ( 147) (138)
Municipal Affairs 938 9 86 48 8
Seniors 75 8 3 8 9
Sustainable Resource Development - 5 5 -
Tourism, Parks and Recreation 1 1 - -
Transportation 1,070 1 ,116 46 54
Treasury Board and Enterprise 19 - ( 19) -
Total 3 ,895 3 ,981 8 6 (99)
2011-12
Change from
a Includes inventory purchases / consumption. Capital investment / inventory purchases are not included in expense, while amortization / inventory consumption
are. Ministries not listed above have no capital investment / amortization or inventory purchases / consumption or the amount rounds to less than $1 million.
3rd 3rd
Quarter 2nd Quarter 2nd
Budget Forecast Budget Quarter Budget Forecast Budget Quarter
Legislative Assembly 5 3 ( 2) (2) 1 2 1 1
Advanced Education and Technology 5 5 - - 5 4 ( 1) (1)
Agriculture and Rural Development 1 3 1 2 ( 1) (1) 15 1 6 1 -
Culture and Community Services 3 2 ( 1) (1) 3 3 - -
Education 1 5 4 - 1 1 - -
Energy 3 1 3 1 - - 21 2 1 - -
Environment and Water 1 1 - - 22 2 2 - -
Finance 2 3 2 3 - - 11 1 1 - -
Health and Wellness 8 5 6 3 ( 22) ( 8) 75 5 8 ( 17) ( 7)
Human Services 1 0 1 1 1 - 6 6 - -
Infrastructure 4 49 3 65 ( 84) (72) 100 9 7 ( 3) (3)
Justice 3 5 2 - 9 9 - -
Municipal Affairs 4 1 5 1 1 0 (57) 2 6 2 6 - -
Seniors 1 1 - - 1 1 - -
Service Alberta 5 0 2 7 ( 23) 4 50 4 5 ( 5) (5)
Solicitor General and Public Security 1 84 95 (89) (105) 6 6 - -
Sustainable Resource Development 1 6 1 9 3 1 16 1 6 - -
Tourism, Parks and Recreation 1 4 1 7 3 - 18 1 8 - -
Transportation 1 ,665 1 ,579 ( 86) (240) 4 11 4 24 1 3 ( 2)
Treasury Board and Enterprise 1 37 - ( 137) ( 26) 1 1 - -
Total 2 ,737 2 ,315 ( 422) (507) 7 98 7 87 ( 11) (17)
2011-12 2011-12
Capital Investment Capital Amortization
Change from Change from
CAPITAL INVESTMENT AND AMORTIZATION a
(millions of dollars)
Budget 2011 • Third Quarter Fiscal Update
8
2011 2012
3rd Change from
Quarter 2011
Actual Budget a Forecast Budget Actual
Financial Assets
Heritage Fund 14,198 14,538 14,581 43 383
Self-supporting lending organizations b 12,606 13,844 14,016 172 1,410
Alberta Sustainability Fund 11,192 5,292 7,462 2,170 (3,730)
Endowment and other funds c 3,302 3,319 3,198 (121) (104)
Equity in commercial enterprises d 2,615 2,662 2,723 61 108
Debt Retirement Account 843 503 503 - (340)
Other financial assets 6,964 7,165 6,836 (329) (128)
Total Financial Assets 51,720 47,323 49,319 1,996 (2,401)
Liabilities
Accumulated debt 828 488 488 - (340)
Pension liabilities 9,716 9,982 9,947 (35) 231
Self-supporting lending organizations b 11,627 12,626 12,759 133 1,132
Liabilities for capital projects 3,199 4,122 3,435 (687) 236
Other liabilities 7,952 7,436 7,278 (158) (674)
Total Liabilities 33,322 34,654 33,907 (747) 585
Net Financial Assets 18,398 12,669 15,412 2,743 (2,986)
Capital Assets 18,975 20,854 20,412 (442) 1,437
Net Assets 37,373 33,523 35,824 2,301 (1,549)
Adjustment for pension liabilities 9,716 9,982 9,947 (35) 231
Net Assets for Fiscal Policy Purposes e 47,089 43,505 45,771 2,266 (1,318)
at March 31
NET FINANCIAL AND CAPITAL ASSETS
a Budget numbers have been restated to refl ect 2010-11 actual results. The $619 million in cash from 2010-11 fourth quarter results transferred into the
Sustainability Fund after March 31, 2011 is reported in "Other fi nancial assets" in Budget numbers.
b Includes Alberta Capital Finance Authority and Agriculture Financial Services Corporation.
c Includes Medical Research Endowment Fund, Science and Engineering Research Endowment Fund, Scholarship Fund, Alberta Cancer Prevention Legacy
Fund and Alberta Enterprise Corporation.
d An adjustment reducing the net equity of Alberta Treasury Branches by $109 million is being made to the April 1, 2011 opening balance to refl ect adopting
International Financial Reporting Standards.
e Under the Fiscal Responsibility Act. Excludes pension liabilities and equity of Crown-controlled SUCH sector organizations and Alberta Innovates corporations.
Net Assets - At March 31, 2012, net assets are forecast at
$35.8 billion, an increase of $2.3 billion from budget but
$1.5 billion lower than March 31, 2011. Th is includes
forecast fi nancial assets of $49.3 billion, $2.4 billion lower
than at March 31, 2011; capital assets of $20.4 billion,
$1.4 billion higher than March 31, 2011; less liabilities of
$33.9 billion, $0.6 billion higher than at March 31, 2011.
Heritage Fund and Endowment Funds- Forecast book
value of Heritage Fund external assets is $14.6 billion,
$43 million higher than budget and $383 million higher
than at March 31, 2011, as a result of forecast infl ationproofi
ng. Total assets of endowment and other funds are
forecast at $3.2 billion, $121 million lower than budget
and $104 million lower than at March 31, 2011.
Sustainability Fund - Assets are forecast at $7.5 billion
at March 31, 2012, $2.2 billion higher than budget, but
$3.7 billion lower than March 31, 2011. Th e increase
from budget is due to the $2.1 billion reduction in the
defi cit, $0.6 billion from 2010-11 fourth quarter results
transferred in 2011-12, partly off set by $0.5 billion in
higher cash requirements, including the impact of not
borrowing the planned $1.8 billion for capital purposes.
Th e decrease from 2010-11 is due mainly to withdrawing
$1.3 billion to off set the defi cit, $0.9 billion in revenue
retained by the Heritage and other funds and agencies,
$2.1 billion in capital and other cash requirements, partly
off set by adding the $0.6 billion in 2010-11 fourth quarter
results in 2011-12. (Details are on pages 1 and 9.)
Total Liabilities - Forecast at $33.9 billion, an increase
of $0.6 billion from March 31, 2011 but $0.7 billion
lower than the budget estimate. Th e decrease from budget
is due mainly to the decision to not borrow the planned
$1.8 billion for capital purposes. Th e increase from last
year is primarily from a $1.1 billion increase in selfsupporting
lending organizations liabilities, mainly from
higher Alberta Capital Finance Authority activity, which is
more than off set by an increase in assets.
BALANCE SHEET
(millions of dollars)
Budget 2011 • Third Quarter Fiscal Update
9
2011-12
3rd
Quarter 2nd
Budget b Forecast Budget Quarter
Capital Cash Adjustments
Requirements
Capital investment (2,737) (2,315) 422 507
Principal repayment /amortization of debt issue costs (19) (19) - -
Total requirements (2,756) (2,334) 422 507
Sources
Capital amortization 798 7 87 (11) (17)
Net book value of capital asset disposals 2 2 - -
Alternatively-financed capital investment 156 168 12 -
Alternatively-financed capital grants 45 56 11 -
Direct borrowing 737 31 (706) (1,806)
Total sources 1,738 1,044 (694) (1,823)
Total Capital Cash Adjustments (1,018) (1,290) (272) (1,316)
Retained Income of Funds and Agencies
Heritage Fund inflation-proofing (339) (383) (44) (28)
Alberta Treasury Branches ( 188) (206) (18) 6
Agriculture Financial Services Corporation ( 259) (289) (30) (37)
Alberta Social Housing Corporation 1 (16) (17) (48)
Access to the Future Fund ( 50) (50) - -
Endowment funds (Medical, Science and Engineering (Milan: ENG.MI - news) , Scholarship) ( 30) 103 133 20
Alberta School Foundation Fund ( 14) (37) (23) (26)
Alberta Capital Finance Authority ( 13) (33) (20) (20)
Alberta Cancer Prevention Legacy Fund 1 0 1 (9) (4)
Other funds ( 8) (28) (20) (20)
Total Retained Income of Funds and Agencies (890) (938) (48) (157)
Other Cash Adjustments
Energy royalties (428) (553) (125) (863)
Student loans (124) (89) 35 35
Other (46) (161) (115) (40)
Total Other Cash Adjustments (598) (803) (205) (868)
Change from
CASH ADJUSTMENTS a
(millions of dollars)
a Negative cash adjustments are a cash requirement; positive cash adjustments are a cash source.
b Budget revenue has been restated, increasing by $11 million as a result of Alberta Treasury Branches (ATB) adopting International Financial Reporting
Standards. Budget ATB net income is increased by $8 million, and the payment-in-lieu of taxes by $3 million. Consequently, the Budget ATB retained income
cash adjustment has been increased by $8 million and other cash adjustments by $3 million.
DISASTER / EMERGENCY ASSISTANCE
(millions of dollars)
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Agriculture and Rural Development
AgriRecovery - 38 38 (4)
Municipal Affairs
Slave Lake wildfires a - 172 172 13
Municipal flood assistance - 105 105 -
Sustainable Resource Development
Forest fire-fighting costs - 250 250 -
Mountain pine beetle infestations - 30 30 -
Total Disaster / Emergency Assistance - 595 595 9
2011-12
Change from
a Does not include $14 million in capital grants or $30 million in capital investment provided in 2011-12 for assistance in dealing with Slave Lake wildfi res.
Budget 2011 • Third Quarter Fiscal Update
10
FINANCING REQUIREMENTS a
(millions of dollars) 2011-12
3rd
Quarter 2nd
Budget Forecast Budget Quarter
Financing Requirements
Direct borrowing for capital purposes 7 37 3 1 ( 706) (1,806)
Term debt borrowing for provincial corporations:
Agriculture Financial Services Corporation 2 80 2 95 1 5 -
Alberta Capital Finance Authority 2 ,100 2 ,570 4 70 470
Alberta Treasury Branches 8 00 1 ,350 5 50 -
Total Financing Requirements 3 ,917 4 ,246 3 29 (1,336)
Financing Completed to Date
Direct borrowing for capital purposes - 3 1 3 1 -
Agriculture Financial Services Corporation - 1 75 1 75 100
Alberta Capital Finance Authority - 1 ,875 1 ,875 9 60
Alberta Treasury Branches - 1 ,350 1 ,350 -
Total Financing Completed to Date - 3 ,431 3 ,431 1,060
Change from
a Does not include alternative fi nancing for capital projects (P3s).
Net 1st 2nd 3rd
Impact Quarter Quarter Quarter
Change ($ million) Budget Forecast Forecast Forecast
Oil price - WTI (US$/bbl) -$1.00 -141 8 9.40 97.85 89.50 96.25
Natural gas price - Alberta Reference Price (Cdn$/GJ) -10 cents -51 3 .45 3.45 3.30 3.11
Alberta Wellhead - conventional oil (Cdn$/bbl) 7 9.43 85.69 81.37 89.27
WCS @ Hardisty (Cdn$/bbl) 7 2.02 76.34 71.82 77.98
Production assumptions:
Oil sands (000s barrels/day) 1 ,850 1,810 1,801 1,788
Conventional crude oil (000s barrels/day) 4 84 508 493 492
Natural gas (billions of cubic feet/annum) 4 ,055 4,306 4,309 4,327
Exchange rate (US¢/Cdn$) +1 cent -154 9 8.38 102.53 100.50 100.3
Interest rates: +1% -212
3-month Canada treasury bills (%) 1 .75 1.50 0.95 0.95
10 year Canada bonds (%) 3 .65 3.55 2.65 2.55
Personal income growth (%, 2011 calendar year) -1% -115 5 .9 6.4 6.4 6.9
Sensitivities Assumptions
a Sensitivities are based on the Budget 2011 assumptions of prices and rates and show the effect for a full 12 month period. Sensitivities can vary signifi cantly at
different price and rate levels. The energy price sensitivities do not include the potential impact of price changes on the revenue from land sales. The interest
rate sensitivity has two components, an increase in cash interest income and capital loss. When interest rates rise, bond prices go down, causing a capital loss.
2011-12 FISCAL YEAR ASSUMPTIONS AND SENSITIVITIES a
Budget 2011 • Third Quarter Fiscal Update
11
ACTUAL RESULTS
Budget 2011 • Third Quarter Fiscal Update
12
ACTUAL RESULTS
FOR THE FIRST NINE MONTHS OF 2011-12
METHOD OF CONSOLIDATION
Th is fi nancial summary is prepared on the same basis
as used in Budget 2011.
Th e results of all government departments, funds
and agencies, except those designated as commercial
enterprises, are consolidated on a line-by-line
basis. Revenue and expense transactions between
consolidated entities have been eliminated.
Th e accounts of Crown-controlled corporations
and provincial agencies designated as commercial
enterprises are included on the modifi ed equity
basis, the equity being computed in accordance with
Canadian generally accepted accounting principles
applicable to those entities.
Th e accounts of the Alberta Innovates corporations
and the Crown-controlled SUCH sector organizations
such as school boards, universities, colleges, technical
institutes, and Alberta Health Services that are
controlled by the government are not included in this
fi scal summary. Th ese Crown-controlled entities are
consolidated on a line-by-line basis in the consolidated
fi nancial statements forming part of the Government
of Alberta Annual Report.
BASIS OF FINANCIAL REPORTING
Th e consolidated fi scal summary reports revenue
(including gains from disposal of tangible capital assets,
expense (including amortization, loss on disposal and
write-down of tangible capital assets), and surplus
(defi cit).
Revenue and expense are recorded using the accrual
basis of accounting. Cash received for goods or
services which have not been provided by period end is
recorded as unearned revenue.
Expense includes the province's cash payments towards
the unfunded pension liabilities. Expense excludes
the change in the unfunded pension liabilities, which
is a non-cash expense that does not aff ect borrowing
requirements.
Debt servicing costs include interest payable and
amortization of discount on debt issues.
Comparative 2010-11 fi gures have been restated where
necessary to conform to the 2011-12 presentation.
Budget 2011 • Third Quarter Fiscal Update
13
CONSOLIDATED FISCAL SUMMARY
for the nine months ended December 31, 2011
(millions of dollars)
2011-12 2010-11 Change
Revenue
Income taxes 8,210 7,682 5 28
Other taxes 2,691 2,571 1 20
Non-renewable resource revenue 8,798 5,900 2 ,898
Transfers from Government of Canada 3,375 3,426 (51)
Net income from commercial operations 1,264 1,785 (521)
Premiums, fees and licences 1,049 969 8 0
Investment income 969 1,612 (643)
Other 1,221 691 5 30
Total Revenue 27,577 24,636 2 ,941
Expense
Program Expense
Legislative Assembly 60 61 (1)
Advanced Education and Technology 2,326 2,584 (258)
Agriculture and Rural Development 785 797 (12)
Culture and Community Services 134 138 (4)
Education 4,671 4,400 2 71
Energy 251 218 3 3
Environment and Water 195 174 2 1
Executive Council 19 20 (1)
Finance 815 850 (35)
Health and Wellness 10,663 10,852 (189)
Human Services 1,791 1,778 1 3
Infrastructure 777 391 3 86
Intergovernmental, International and Aboriginal Relations 115 114 1
Justice 349 333 1 6
Municipal Affairs 1,382 1,301 8 1
Seniors 1,568 1,521 4 7
Service Alberta 186 183 3
Solicitor General and Public Security 504 469 3 5
Sustainable Resource Development 426 309 1 17
Tourism, Parks and Recreation 126 114 1 2
Transportation 982 1,080 (98)
Treasury Board and Enterprise 39 39 -
Total Program Expense 28,164 27,726 4 38
Debt servicing costs 245 212 3 3
Total Expense 28,409 27,938 4 71
Surplus (Deficit) (832) ( 3,302) 2 ,470
First Nine Months
Produced by
Government of Alberta
Finance
There are no comments yet