EDMONTON - Finance Minister Robin Campbell said Alberta will slash nine per cent from its annual budget to cope with a $7-billion resource revenue shortfall, a move criticized as a “scorched earth” approach to the province’s fiscal crisis.

The government would normally approve a roughly four-per-cent bump in spending to accommodate for population increases and inflation, which would mean a $1.8-billion increase over and above last year’s $44.4-billion budget.

That increase will be cut, Campbell said Wednesday.

In addition, the province will cut five per cent across the board, which will mean a $2.2-billion reduction in overall spending, year over year.

“We’re probably in the neighbourhood of nine-per-cent reductions for 2015-16 in government spending moving forward and going on to the next years out,” Campbell said, adding the government is facing a roughly $7-billion shortfall in each of the next three years.

“Three years of doing nothing would put us almost $20 billion in debt on the operating side. We’re not about to see that happen. So we will make the tough decisions we have to.”

Campbell made the announcement at a news conference with Premier Jim Prentice, who also said he will unilaterally overturn a decision by an all-party committee to reinstate over $500,000 in funding for Alberta’s auditor general.

Prentice revealed the latest estimates from provincial economists put the price of oil benchmark West Texas Intermediate at $51.24 per barrel for the duration of the 2015-16 fiscal year.

Thereafter, he said the price of WTI is expected to rise to $62.17 in 2016-17 and to $75 in 2017-18.

“It’s clearly not realistic in the environment that we are in to expect that government expenditures will continue to increase,” Prentice said.

NDP Leader Rachel Notley said the announcement contradicts what Albertans want to see.

“At a time that this government is about to embark on a panicked, slash-and-burn scorched earth policy, once again à la Ralph Klein, we need a good solid, well-resourced auditor general more than ever,” Notley said.

“We need to understand the damage that this short-sighted panicked approach is going to incur on regular folks and families in Alberta.”

Wildrose finance critic Drew Barnes said his party would cut “with a rifle, not a shotgun,” focusing on “corporate welfare” and “layers of government bureaucracy.”

“I don’t believe that he’s going to cut nine per cent — one minute he talks about cutting, then he talks about building, then he talks about taxing everything that moves,” Barnes said.

“They’re destroying business confidence by threatening to tax anything that moves — tax on sugar, tax on gas, Alberta health-care premiums, and raising our 10-per-cent flat tax rate.”

News of the cuts came the same day Prentice said Alberta union leaders “need to recognize the severity of the circumstances” the province is in, and need to be “part of the solution.

“We have signed contracts that clearly need to be honoured. There are wage increases that have currently been baked into the budget over the course of the next three years that were negotiated previously. There are also negotiations that will be undertaken in the next year,” he said, noting 81,000 public sector employees will have contracts negotiated in the next fiscal year.

“We will sit down at the appropriate time with the union representatives and get into some of the specifics.”

mibrahim@edmontonjournal.com

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