CALGARY – For the first time in nearly two decades, the Alberta government expects it will qualify for federal financial aid from a program designed to help provinces cope with steep, sudden drops in revenue.

Finance Minister Iris Evans said officials in her department have given their counterparts in Ottawa a heads-up that Alberta may come calling for fiscal stabilization dollars.

Unless the economy makes a dramatic turnaround shortly, the province anticipates it will qualify for$220 million in one-time funding after the 2009-10 year ends in March. The Alberta government may also make a case for the fiscal year that just passed, after revenue figures are finalized next month.

Alberta’s need for federal stabilization cash is another sign of its stunning reversal of fortune–plummeting from an unprecedented economic boom into a recession.

Today, at a meeting in Quebec of provincial finance ministers and federal Finance Minister Jim Flaherty, Evans will make another pitch for an additional $700 million in annual federal health transfer dollars.

Alberta contends it’s being shortchanged about $200 per resident compared with most other provinces and territories. Ontario was given a bump to its health transfer funding in January’s federal budget.

“We believe that Ontario and Alberta should, if one gets that kind of concession, Alberta has equal claim because of the issues around taxation, tax points,” Evans said.

The Stelmach government views its fight for extra health dollars and its likely qualification for stabilization cash, potentially totalling $920 million, as crucial at a time when it’s faced with the prospect of significant cost-cutting.

The province pledged to find an extra $215 million to trim from its recently delivered$36.4-billion budget and warned another $2 billion in savings or boosted revenues would be needed if the economy doesn’t rebound by early next year.

“There will no doubt have to be some reductions in expenditure,” Evans said after delivering a speech in Calgary recently.

“I’m not likely to find $2 billion in people owing us money . . . there’s likely going to be some other adjustments that we’ll have to make in the way we’re spending money currently to have ourselves fit the cloth that we’ve got.”

Roger Gibbins of the Canada West Foundation believes it’s important Alberta lobby Ottawa on the health funding, but he’s not optimistic the province will win the argument.

“This is a federal government that’s quite constrained and that will be, I think, unwilling to dip too far into (federal-provincial) transfers right now,” he said.

Still, by making a claim for increased health cash and federal stabilization dollars, Gibbins contends the province is sending a key fiscal message to Albertans and the rest of the country: Alberta is no longer gushing with surpluses.

“We prided ourselves for (nearly) 20 years of really being outside consideration for this kind of stabilization,” Gibbins said.

“It’s a message to Albertans about the seriousness of our situation, but it’s also a message to other Canadians that you have to see Alberta not as an exceptional province, but as a province like the others.”

The federal stabilization program was created in 1967 to protect provincial governments from sharp year-over-year declines in revenue due to extraordinary downturns.

The last and only time Alberta has qualified for stabilization financial aid from Ottawa was in the wake of the 1986 recession.

According to figures provided by the federal Finance Department, the province received$419 million over three years, starting in 1989-90.

In all, the stabilization program has paid out$2.3 billion to provinces since its creation. Eligibility rules were tightened and the amount of cash doled out per resident was capped at $60 following a flood of demand in the early 1990s from every province except Alberta and B. C.

To qualify for stabilization aid, a decrease of at least five per cent in provincial revenues from one year to the next must have occurred. Other factors are also considered.

The Alberta government has forecast a 6.7 per cent drop in revenue in 2008-09 from the previous fiscal year, while revenue is expected to plunge 11.1 per cent in 2009-10.

However, University of Calgary economics professor Ron Kneebone notes the elimination of health-care premiums and this year’s royalty breaks could influence whether Alberta qualifies for stabilization money and, if so, for how much.

“The program does not compensate for self-inflicted wounds,”Kneebone said, noting health premium cuts could cost coffers $1 billion.

Meanwhile on the Alberta-Ottawa health funding battle, the federal government hasn’t rebuffed the province’s request. But it also hasn’t indicated whether the province’s request will ever move beyond talks.