Texas vs Alberta: Similar economies, opposite fiscal situations
Posted Nov 17, 2016 7:56 am.
This article is more than 5 years old.
When Alberta’s energy boom turned to bust it didn’t take long for many to start worrying about what it meant for the province’s fiscal situation.
Deficits and mounting debt are the new reality, but a new report from the Fraser Institute says it didn’t have to be that way, and it’s not just because of slumping oil prices.
Just look at Texas.
The report suggests years of mismanagement by successive Alberta governments has come back to haunt us, while spending restraint has left the Longhorn State in much better shape.
Report co-author Ben Eisen says one example is that during the boom, Alberta’s per person program spending jumped 49 per cent compared to 37.3 per cent in Texas.
“Texas right now is in good shape fiscally,” he explained. “They’ve run a series of surpluses and are not projected to have a big run up in debt while Alberta on the other hand has had a series of deficits and has a big run up in debt forecasted for the future.”
He explains that in 2004/2005, per person spending in Alberta was 68.4 per cent higher than Texas. In 2013/2014 it was 82.8 per cent higher.
The Public Sector grew 2.6 per cent in Alberta and only 1.2 per cent in Texas.
“So Alberta’s finances, which not that long ago were in pretty good shape with a pretty significant store of net assets, those have all been dwindled and eroded and now we’re about to being running up debt and within a couple of years Alberta’s debt load will simply dwarf Texas’,” he said.
Eisen adds the report is only looking at spending growth based on population, so things like universal health care spending in Canada was taken into account in order to make it a fair comparison.
The report concludes Texas’ financial position is comparatively strong while Alberta faces large budget deficits and a potentially costly and economically damaging run-up in debt.
