Alberta fiscal update projects $8.5B budget surplus

The Alberta government said Tuesday its budget surplus for this fiscal year is projected to be $8.5 billion because of higher-than-expected oil and gas revenues.

The surplus is $7 billion higher than the government projected in its budget released in April.

"I think it's clear that Alberta is still leading the nation," Alberta Finance MinisterIris Evans said after its fiscal update was released during the first quarter. "Our economic outlook continues to be bright."

The government said oil royalties are now $3.5 billion more than budgeted, while natural gas royalties are$3 billion higher than forecast.

The government said it plans to put $2.5 billion of its surplus in unspecified savings. The amount will bring government savings this year to $3.1 billion.

Evans said $2 billion from the surplus will be used to create a fund for carbon capture and storage projects, another $2 billion will support public transit upgrades and $1 billion will be used for infrastructure projects.

"Alberta's economy continues to do well despite a general slowdown in global economic activity," Evans said.

Oil prices forecast to rise

Revenues for this fiscal year are forecast to reach$46.6 billion, while expenses are projected at $38.1 billion. The government said revenue is higher than initially forecast in the budget in part because of a stronger outlook for corporate profits.

The government said oil prices are forecast to average $119.25 US a barrel, an increase of $41.25 US from the budget.

Alberta already has more than $38 billion Cdn in various savings accounts, including $17 billion in its Heritage Savings Trust Fund.

About $525 million from the surplus will be placed in the Heritage Fund to guard against inflation.

According to the fiscal update, the Heritage Fund is forecast to earn a net income of $774 million this fiscal year, the same amount as forecast in the budget.