Alberta is scrambling to find hundreds of millions of dollars in cost savings as plunging natural gas prices have left the province with a record $7 billion budget deficit.
The first-quarter budget update shows the province is awash in red ink with a deficit roughly $2 billion bigger than forecast.
Finance Minister Iris Evans has ordered provincial bureaucrats to cut $430 million from program spending by the second quarter.
Premier Ed Stelmach said Tuesday that the province's financial pain would likely continue for at least two years after the recession ends.
But Stelmach also said the deficits over the next few years will be offset with $17 billion in emergency savings, so no tax increases are planned and he's reluctant to cut jobs.
Revenues are down $2.1 billion from the April budget and spending is up $72 million largely because of disaster and emergency funding for things like fighting forest fires and the pine beetle infestation.
The spending cuts ordered by Evans have doubled from $215 million to $430 million this year.
The new budget targets for oil and natural gas have also been revised.
The forecast price for oil is now $61/barrel up from $55.50/barrel.
The forecast price for natural gas is now $3.75/GJ down $5.50/GJ.
Critics acknowledge the economic downturn but say the government could have done a better job by cutting infrastructure spending. "Seven billion dollars in one year, in the existing climate of deficit, is going to push us over the top, it's not responsible," says David Swann, the leader of the Alberta Liberals.
One bit of good news in the update is a $1 billion rebound by the Heritage Fund, which lost roughly $3 billion late last year in the stock market plunge.
