The new United Conservative Party caucus is facing a $337,000 budget black hole unless it takes drastic action, the Sun has learned.



To cover the shortfall, it's looking at staff layoffs and will ask MLAs to dip into their members' services allowances. A source spoke to the Journal about the financial situation on the condition of anonymity because the person isn't authorized to talk about the issue.



A handful of UCP staffers are currently on leave while they work on leadership campaigns, but even the money caucus is saving there doesn't plug the gap.



Each caucus gets an annual budget and isn't allowed to go into deficit. At a high-level meeting Thursday afternoon, UCP caucus brass grappled with finding savings.



The funding essentially comes from taxpayers, administered through the legislative assembly office.



Estimates put the 2017-18 allowance at $2.8 million for Wildrose and $1.13 million for the Progressive Conservative caucus, but those figures were prior to the parties merging.



It was also before Strathmore-Brooks MLA Derek Fildebrandt and Vermilion-Lloydminster MLA Richard Starke became independent MLAs.



The combined UCP caucus will now get around $1.9 million for the remainder of the fiscal year.



Strict rules govern how the money can be spent.



Expenditure guidelines say it is to be used to support members in the conduct of their parliamentary roles, including research and assistance with policy development, for example, communications, administrative support, and help drafting private members' legislation, motions and questions for the legislature floor.



Members get a separate allowance from the legislative assembly office to pay for items they need to execute their duties as MLAs. It covers constituency office operations and communications, gifts and security systems for members' homes, but forbids anything partisan, including items with political logos or methods to solicit donations.



It's that allowance the UCP caucus is asking MLAs to dip into, but it will be a tough sell.



The source said buy-in from UCP MLAs is highly unlikely because the financial bind came as "a complete and utter surprise."



It's within the rules for an MLA to transfer a portion of his or her allowance to caucus, but the maximum amount is around $40,000.



Where did the money go?



The financial issues stem largely from a $322,000 deficit brought to the UCP table by the Wildrose Party. The PCs also came bearing red ink, principally from the money caucus lost when it didn't have a leader.



The source acknowledged it's problematic for a party that considers itself the gatekeepers of fiscal conservatism to be facing a cash shortfall, but said the caucus is taking action to fix the problem.



Former Wildrose leader Brian Jean wasn't available for an interview but, in an emailed statement, said he has never had a deficit year in caucus and won't this year.



Caucus budgets are seasonal, he said, and even out across the fiscal year.



With a unified caucus, he said, a balanced budget will require "thoughtful spending decisions."



"If I am returned as leader, I am confident that with prudent business-like attention to spending, we will finish the year within the budget that the legislature has set for us, as we always have," he said.



The UCP has by far the most staffers of any caucus — 38 for its 28 MLAs, compared with the NDP's 24 staffers for 55 MLAs. The Alberta Party has three and the Liberals four.



United Conservative press secretary Samantha Johnston said the caucus does not comment on internal budget matters.



Candidates are currently duking it out for party leadership.



Jean is up against former PC leader Jason Kenney, Calgary lawyer Doug Schweitzer and former Wildrose president Jeff Callaway.



Membership will vote on Oct. 28, two days before the legislature is due to reconvene for its fall sitting.



egraney@postmedia.com



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