This memorandum from the late summer of 1981 captures the momentum of spending that had built up under the Lougheed government in 1981. As previous documents have shown, a great deal of money was being spent to cushion the blows from the National Energy Program and the attendant difficulties associated with lower oil price projections and high interest rates.
As departments rushed to take advantage of a more generous attitude within the provincial cabinet to spend, the volume of additional requests suggested mid-year of supplementary estimates to presented at a fall sitting of the Legislative Assembly. Collins’ memorandum attempts to get ahead of the list of Special Warrants, appropriations made by the provincial cabinet rather than the Legislative Assembly. These Special Warrants would be subject to Assembly approval at later dates. As the memorandum reports, the Legislative Assembly would view this move positively because backbenchers and the small number of opposition MLAs would feel their worth, reviewing legislative appropriations, was being recognized.
Frequently governments are criticized for the heavy use of Special Warrants and this was especially the case when Dick Johnston was the Provincial Treasurer during the 1986-1992 period.
The memorandum, at the request of Hyndman’s Executive Assistant, Jim Dinning, is unusual in that its very question is essentially a political- legislative one. Certainly, Hyndman and Dinning wanted the department’s perspective as it would involve significant additional work. Perhaps, Treasury’s administrative guidance helped in resolving this legislative conundrum.
FROM: Deputy Provincial Treasurer FILE REFERENCE:B-5010-1/5035-6
434 Terrace Building
TO: Hon. Lou Hyndman DATE: 24-Aug-81
Provincial Treasurer
323 Legislature Building TELEPHONE: 7-4106
SUBJECT: Supplementary Estimates of Expenditure 1981-82
In response to Jim Dinning’s request of 30-Jul-81 for an assessment of the feasibility of a 1981-82 supplementary estimate, it is our view 1981-82 is not an appropriate time to implement a supplementary estimates review process.
A survey of departments indicates that up to 75 Special Warrants for the remainder of the year may be forthcoming. While this large number will likely be reduced as surplus is found in each programme and as actual needs are identified, it is apparent that a mini-budget preparation, analysis, review and Priorities Committee decision process of some type would have to be instituted to deal with this volume of requests. There is always the danger that departments would take advantage of this new form of decision point and bring forward additional requests. Given the main budget review in December, any supplementary review would have to occur in a very short time frame.
In addition, ideally the ” main” Estimates of Expenditure would contain a reserve within the financial plan specifically for unanticipated supplementary requirements during the year (i.e. a reserve to meet statutory requirements, unanticipated operating deficits and to fund new policies or programmes). This would ensure the integrity of the annual financial plan including the supplementary estimate. Our 1981-82 financial plan does not spell out a supplementary requirement.
As a final comment on this aspect, Treasury is currently updating the 1981-82 financial plan which will show a decrease in revenues as a result of the revised forecast for natural gas revenues. Given this decline, it would not appear to be appropriate to draw attention to increased expenditures by having a supplementary estimate.
In general, however, we could support the creation of a supplementary estimates process in future years. Some of the pros and cons for doing this in fiscal years after 1981-82 are as follows:
Pros
- The process would help ensure that many government expenditure decisions are made in a more coordinated way within the context of the annual financial plan.
- The Legislature would also view this addition positively.
- The Provincial Treasurer would have an opportunity to communicate new financial and budgetary measures as required or reaffirm the status of the annual financial plan.
- The number of Special Warrants would be reduced for routine matters. And warrants or new programmes could in some years be eliminated.
- Priorities Committee would have the option of deferring some items from the main estimates to the supplementary estimates decision process. There are currently numerous “walk-on” items that Priorities Committee budget review meetings which could more appropriately be handled as part of the supplementary estimates.
- Departments would likely support the use of a supplementary estimate.
Provincial Treasurer Lou Hyndman Source: Provincial Archives of Alberta HeRMIS 
Jim Dinning Source: Calgary Herald
Cons
- Priorities Committee and Treasury would have to go through a decision process similar to, but less complicated than, the main estimates budget review. However, if the process did become time-consuming, the budget cycle may eventually have to be lengthened.
- As many departments often end up not requiring the full amount of Special Warrant funding they obtain (due to delays in implementation or the need does not materialize), a supplementary estimate process may actually contribute to lapses of this nature because it will force funding decisions to be made prematurely in many cases.
- Alternatively, creating a formal “second chance” budget process which is publicly known, could give added pressure to increase expenditures.
In the final analysis, our feeling is that the advantages outweigh the disadvantages, for 1982-83 and beyond.
Signed
A.F. Collins
gs/
Original Memo and Attachment (see PDF below)
24-August-81-memo-re.-supplementary-estimatesSource: Provincial Archives of Alberta, PR1986-0245 (Hyndman papers), Box # 45, File # 638.
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