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CALGARY, Alberta (Reuters) - The Canadian province of Alberta, the biggest source of oil exports to the United States, said on Tuesday it expects to balance its operating budget in the current fiscal year on higher than expected resource revenue.
The forecast, which does not include capital spending for roads, schools and other items, is up from the initial estimate of a C$451 million deficit made in the province's spring budget.
In its second-quarter budget update, the province said second-quarter operating revenue was C$20.35 billion ($19.31 billion), C$1.38 billion higher than forecast in the government's spring budget, as energy and other resource revenue, at C$4.48 billion, was 27 percent higher than expected.
However it expects the rise in royalty income to slow as Canadian oil prices, particularly for tar-like bitumen produced in the province's oil sands, weaken in comparison to U.S. grades.
"We expect revenue growth the stall in the face of that growing differential," Doug Horner, the province's finance minister, said on a conference call.
Alberta also expects to spend C$4.3 billion on relief and rebuilding programs following devastating June floods in the province's south, the most expensive natural disaster in Canadian history. However, C$3.1 billion of that will come from the Canadian government, Horner said.
($1 = 1.0541 Canadian dollars)
Reporting by Scott Haggett; Editing by Gerald E. McCormick and Meredith Mazzilli