The province is delivering another deficit budget for 2012/2013, eating through the majority of record-breaking revenue projections by significantly increasing overall spending.

Documents released Thursday show Alberta is expected to top $40 billion in earnings for the first time in history, due mainly to high forecasts for oil prices and bitumen royalties. Spending, however, is slated for $41.1 billion, with operational costs rising by 6.9 per cent.

"This is not a budget where you're going to see deep cuts," said Finance Minister Ron Liepert, as he projected the province will remain $886 million in red by the end of the fiscal year, returning to a $952 million surplus by 2013/2014.

Many critics argue the government's outlook is too rosy because it estimates the province's economic growth will increase by 3.8 per cent in 2012, which is well above the national and U.S. average.

To achieve this end, Tories predicts a barrel of West Texas Intermediate will sell for US$99.25/bbl, up $3 from the 2011/2012 projection and almost $30 from the actual revenue in 2009/2010. Bitumen royalties are also expected to skyrocket, increasing 30 per cent this year for a total of $5.7 billion in revenue, then continuing to grow 32 per cent for each of the next two years.

"These are fantasyland projections," argued Wildrose leader Danielle Smith. "There is no possible way we are going to see a 40 per cent increase to resource revenue. They are talking about near record high resource revenues."

The Canadian Taxpayers Federation, on the other hand, believes bitumen estimates are realistic, but questions whether the government will actually see the anticipated ten per cent increase in personal income tax and 11.5 per cent increase for corporate taxes.

"The economy is going to have to be red hot for those numbers to come true," said Scott Hennig. "They're well above what the private sector is forecasting."

Opposition members also suggest this year's deficit projection is misleading, since it relies heavily on the province's Sustainability Fund. Documents show to get back in black, the coffer will drain from $7.46 billion in 2011/2012, to an estimated $3.73 billion in 2012/13 and $2.394 billion in 2013/2014.

The Alberta Party takes issue with the fact the province remains in debt despite drawing heavily on savings.

"Anticipate a $900 million budget shortfall, fifth year deficit – this isn't what Albertans were looking for," said leader Glenn Taylor.

Still, the finance minister defends the budget , describing it as "positive, realistic and responsible." Liepert repeatedly stressed decisions were based on nine months of extensive consultation with Albertans from across the province.

He says citizens collectively identified healthcare, education and infrastructure as key priorities.

At the same time, the Finance Minister admits the province needs to get away from its dependence on oil revenue and says a massive review of Alberta's fiscal framework is planned for the coming year. He would neither confirm nor deny if some form of tax increase will offset ballooning costs.

"Those are good conversations for Albertans to have," said Doug Horner, president of the treasury board, when pressed about the issue.

"We acknowledge that we can't continue to have a 6.9 per cent operating expenditure increase," added Liepert.

Big Winners: Low-Income Families and AISH Recipients

Major beneficiaries of Budget 2012 – dubbed Investing in People – include low-income families and those who rely on Assured Income for the Severely Handicapped (AISH).

A new $21 million initiative will see households qualify for full child care subsidies if total annual income is under $50,000. The previous threshold was $35,000.

Government officials believe this will affect approximately 26,000 children, with 4,000 families who already receive funding seeking increases, and between 3,000-5,000 new families applying for assistance.

Maximum allowances for daycare are $628 for infants between one-18 months, $546 for toddlers from 19 months-kindergarten and $310 for children in grades one to six. Funding for day homes will be $520, $437 and $310, respectively.

AISH funding is also increasing by $271 million, marking a 34 per cent funding spike. The 46,000 affected Albertans will see their monthly assistance rise from $1,188 to $1,588 starting April 1st. Monthly income exemptions will also jump from $400 to $800 for single clients and from $975 to $1,950 for families.

Both the Liberals and the NDs believe the funding increases are about nothing more than gaining votes, and could be reversed after polls close this spring.

"This budget is dust in the eyes of Albertans just before an election," argued Brian Mason, who suggests seniors in assisted-living accommodations could be particularly vulnerable. "Being Conservatives, I think once we get on the other side of the election, if they're re-elected, they will cut services in preference to raising taxes on their wealthy friends."

Liepert dismisses that suggestion as nothing more than fear-mongering.

"There is certainly no hidden agenda here," he said. "If someone is drawing the conclusion and boogie man theories let them go ahead, because they are wrong."

Other Key Highlights

  • Increase of $49 million (12 per cent) for Public Security. Money will see 30 new RCMP officers added to Alberta this year and 60 officers added next year. 55 additional sheriffs will also be hired to provide a heightened security presence in court rooms.
  • Three-year predictable funding for school boards, post-secondary institutions and municipalities to allow greater sustainability.
  • $125 million in each of the next three years to support health investments such as family care clinics, addictions and mental health services, home care and enhanced rehabilitation programs.
  • A 58 per cent hike in environmental monitoring, science and reporting. $11 million of this will be allocated to a reporting system, with the Lower Athabasca area identified as a priority region.
  • Canadian Taxpayers Federation suggests $44 million budgeted for emergency situations is far too low, arguing the historic average sits at $500 million

Daryl McIntyre will deliver all your budget highlights live from the Alberta Legislature tonight. Make sure to tune into 5:00, 5:30 and 6:00 casts.