With record resource revenues on the books for the 05-06 fiscal year, talk has surrounded what Alberta should do with its new found prosperity. Generally three options are discussed: spend it, save it, or give it back to Albertans.

This years' provincial budget proved once again to be a disappointment for most taxpayers hoping for a combination of tax cuts, savings and spending restraint. In fact, for every $1 in tax cuts the government ramped up spending by $7.

Thanks to the continuous increase in program and capital spending, those three options of spending, saving and giving back might soon be replaced with three different options. Unfortunately the next three options aren't quite as attractive.

Every year the Alberta government becomes more and more reliant on non-renewable, non-reliable resource revenues to fund core programs. This is particularly concerning because Alberta has no control over how much revenue will be generated by non-renewable resources.

Being that the government is projecting to rake in $11.4 billion in these resource revenues this year, they can afford it - this year. But the question that should be on the minds of every taxpayer is what's going to happen next year, and the year after that

The government was often criticized for low-balling energy prices and resource revenues, and then coming in with huge budget surpluses. But it was that low-balling that ensured we didn't run deficits back in the 1990's and ensured we had surplus funds to pay off our debt. The conventional wisdom was better to under-estimate than over-estimate.

Taxpayers will recall what happened when resource prices were over-estimated in the 1980's - deficit budgets and a burgeoning debt. However, it was only a few years ago in fiscal year 2001-02 when the government over-estimated the price of natural gas. The original estimated price was $5.03/mcf, but it was re-adjusted in a special emergency fiscal update in October 2001 to $3.75/mcf.

To keep within its own balanced budget laws, spending had to be cut. Over $700 million in infrastructure projects were deferred, community lottery boards were scrapped and every ministry had to eat a 1 per cent reduction in their base funding.

Thankfully, the government took action when it did or Alberta would have run a $1.2 billion deficit that year. But it came at a political cost. Albertans were outraged that their promised infrastructure projects were put on hold and furious that their community lottery boards were taken away. Road building and construction companies lost significant government business and some laid-off workers.

Obviously these actions had consequences and should have been a wake-up call for the government. Resource revenues are extremely volatile. The Alberta government does not have the luxury to decide what OPEC is going to do, whether there is a particularly mild winter in the States, or if and when a terrorist attack might take place. Simply put, the Alberta government has no control over the amount of resource revenues they receive.

Taxpayers thought the government had taken notice in 2003 when they introduced the Sustainability Fund which not only created a new $2.5 billion emergency fund, but also capped the amount of resource revenues the government could use for core funding of services at $3.5 billion.

Unfortunately, those good intentions seemed to be thrown out the window one year later when that cap for initial spending of resource revenues was raised to $4 billion, and then to $4.75 billion in 2005.

Now the government intends to amend the now ironically named Fiscal Responsibility Act once again this year, moving the cap up to $5.3 billion.

If resource revenues fall, even to 1999-2000 levels, the government will have three new options in front of it: cutting, borrowing or raising taxes.

Not the three options most Albertans thought we'd be talking about in Alberta's second century.