When the Canadian Taxpayers Federation started its campaign to have Alberta's health-care premium tax eliminated in 2003, no one knew how or when it might end. Yesterday's 2008-09 Alberta budget brought our campaign to a successful conclusion with the announcement of the full elimination of health-care premiums by Jan. 1, 2009. Unfortunately, this tax cut was the only cause for taxpayers to celebrate.

But first the good news. Elimination of the dreaded health-care premium tax will benefit almost all Alberta taxpayers, regardless of whether they pay their premiums directly or an employer kicks in a portion. Those families who send a quarterly cheque to the government will save $1,056 annually.

However, Albertans must not merely dismiss this tax cut if their employer writes the cheque for them. Any payment a company pays on an employee's behalf is considered a taxable benefit, meaning that they have to pay provincial and federal income taxes on this "income." A one-income family of $50,000, whose employer pays half of the premium tax, will see a $697 tax savings next year. A two-earner family with a combined income of $75,000, whose employer pays the full premium, will still see a tax cut of $338 per year.

Moreover, reminding your employer next January that they're saving $1,056 by not having to pay your family's health-care premiums is a pretty good opening line when you go in to ask for a raise.

The health-care premium tax cut is not just good policy, it's good politics. Fully 80 per cent of Albertans told an Ipsos Reid poll for the Calgary Herald that they support the elimination of this tax. It is also a classic case of a smart politician under-promising (phase out the premium over four years) and over-delivering (gone within one year).

However, the budget was not all sunshine and lollipops. Our government's junkie-like addiction to spending has once again been given its yearly hit.

Program spending is up 12 per cent from last year's budget. This would be worrisome in most years, but it should be particularly troubling considering the government is projecting only a 2.2 per cent increase in revenues. Clearly that math doesn't work for long.

Granted, the government has a history of under-projecting resource revenues. Previously, that difference resulted in multibillion-dollar surpluses. However, this past year the government only under-projected resource revenues by a hair and actually over-projected how much they'd receive from natural gas revenues.

Our growing reliance on non-renewable resource revenues to fund the basic spending of the government should cause taxpayers some alarm. If resource prices dip unexpectedly, the government will be forced to choose from four unthinkable options: cut spending, raise taxes, deplete savings or run a deficit to balance the budget.

It is doubtful most Albertans will appreciate their health-care premium cut being eaten up by new tax hikes if the price of natural gas starts to drop.

But as said many times before, Alberta does not have a revenue problem, it has a spending problem.

Alberta is now slated to spend $10,516 per Albertan on programs this fiscal year. This is by far the highest of all the provinces and 30 per cent more than the provinces of British Columbia, Saskatchewan and Manitoba. It's spending that would make the most radical NDP premier blush. Unfortunately, this is not a new trend. The last three provincial budgets have increased program spending by 14, 10 and 17 per cent respectively. Since 2000, spending has more than doubled from $18 billion to $37 billion. No Canadian jurisdiction can boast the same, and it's doubtful any jurisdiction in North America could claim to have increased the size of government as rapidly as Alberta's "Conservatives."

Albertans are right to ask whether they are receiving Cadillac service for the Cadillac costs. Are we receiving the best health care and education in Canada? Are we receiving 30 per cent better health care or education than our western neighbours?

Overall, the 2008-09 Alberta budget has handed taxpayers a very mixed bag. In the short-term, the regressive health-care premium tax will be gone, resulting in money back in the pockets of virtually every Albertan. In the long-term the government's spending is completely unsustainable, which could bear bad news in the future for taxpayers. If that happens, history may judge this budget much more harshly.