Tomorrow afternoon, the Alberta government will deliver its third quarter fiscal update. We’ll get a closer look at the province’s fiscal position – and what the government is doing about it. There are a few important things to watch for.

In the October budget, the Alberta government revealed a $6.1 billion increase to the province’s debt. The debt is currently sitting at $17.3 billion. You can see our debt rolling in fast and furious in real time at www.albertadebtclock.ca. The budget showed the debt will essentially double over the next two and a half years.      

We’ll be looking to see where our total debt stands and by how much it’s projected to increase.

We’ll also be looking at the province’s deficit – how much more the government is spending than it is taking in. In the October budget, the deficit was a whopping $8.9 billion including infrastructure spending. Since then, the government has increased spending, but has done almost nothing to scale back. If the government continues to spend at unsustainable levels, the deficit will continue to grow. That means more debt with which we’re burdening taxpayers and future generations.   

Immediately after the budget was released, credit rating agencies raised concerns. Moody’s called the budget ‘credit negative’. We knew how that story ended: Alberta’s credit was downgraded by Standard and Poor’s, and the province’s outlook was lowered to negative by two other major bond ratings agencies.

The clear warnings from bond rating agencies were bad news for taxpayers today and tomorrow, but the province is also at the point where the cost of borrowing could increase. That means not only a larger tax burden (especially on future generations), but also a compromised position for the social programs upon which all Albertans rely.

Financing health care services when the province is in deficit, for example, can become more difficult with a weakened credit position. It works much the same as a credit card for individuals. The more debt you rack up on your Visa card, the higher your interest rate becomes, and therefore the more expensive it is for you to keep charging things to that credit card.

So, we will be looking to see just how much money the government will be putting on the taxpayer Visa card.

In the October budget (pg 28), the government estimated the price of oil at $50 for 2015-16, $61 in 2016-17, and $68 in 2017-18.  Those predictions are turning out to be quite rosy. Today, the price of oil is $31.75 – a far cry from $50. Particularly in the Finance Minister’s comments following the fiscal update, we’ll be looking to see if the government acknowledges that its oil price predictions were too high, and plans to adjust those predictions to more realistic levels in future.

The government should always be conservative in its oil price projections. It’s just responsible budgeting. Consider this: A mother and father are budgeting for their family for the year. It’s possible the mother might get a bonus of several thousand dollars from her boss, but it’s equally possible that she might not. That bonus could make a big difference in what kind of car they can purchase – an SUV instead of a van. Should that family budget assuming she will get the bonus, and splurge on the SUV? Or should they budget conservatively, assume she will not get the bonus, and either buy the van or ‘wait and see’ before buying any vehicle?

Of course the second scenario makes the most sense. That family doesn’t want to be screwed over later that year when they have to make a payment on their daughter’s tuition. They want to ensure they have enough money to cover their expenses. So they budget conservatively. If they end up with a surplus later because of the bonus, great!

Back in July of last year, Finance Minister Ceci said that, “forecasts indicate our economy will recover in 2016.” It’s 2016, and as for that recovery, so far all we have is a chorus of crickets. The most important overarching thing to watch for is whether or not the government will take responsibility for its role in Alberta’s tumbling fiscal position, show restraint and make responsible budgeting decisions now, instead of passing the buck to future Alberta taxpayers.