Alberta Unveils Massive Deficit Budget as Spending Rises
Province Projects Record Large Deficit
Alberta’s government has presented its 2026 provincial budget with a significant shortfall. The budget forecasts a $9.4-billion deficit for 2026–27, the largest since the post-pandemic period. This gap exceeds projections for the current year and follows another deficit under Premier Danielle Smith. The government predicts further deficits of $7.6 billion in 2027–28 and $6.9 billion in 2028–29. Taxpayer-supported debt is set to rise nearly $17 billion, reaching almost $109 billion in 2026 and about $138 billion by 2029. Researchers say this reflects shifting fiscal pressures in the province amid changing economic conditions.
Total revenue for the upcoming fiscal year is forecast at about $74.6 billion, while spending totals roughly $83.9 billion, including a $2 billion contingency. Officials have acknowledged that Alberta may need oil prices of $74–$77 per barrel to balance the budget, but current forecasts put average prices significantly lower, contributing to the shortfall.
Economic Factors and Oil Dependence
A key driver of the budget strain is reduced oil revenue. Energy markets have seen lower prices for benchmark crude, which weighs on provincial resource royalties. Alberta relies heavily on non-renewable resource revenue, which is now forecast to make up about 18 per cent of total government income, down from higher levels previously. The slump in oil prices and global uncertainty have dampened corporate profits and personal incomes in the province.
Finance Minister Nate Horner acknowledged that the budget extends beyond Alberta’s own fiscal rules, which generally limit deficits to three consecutive years. Officials said they will seek amendments to fiscal legislation to reflect the current economic context.
Investment in Public Services
Despite the large deficit, the budget increases funding for key services. Education funding rises to $10.8 billion, a 7.2 per cent increase, in part to support hiring thousands of additional teachers and assistants. Infrastructure funding includes billions for school projects and modernization. Health care spending grows to $34.4 billion, up nearly 6 per cent, with resources allocated for surgical services, assisted living, and mental health supports.
These investments underscore the high demand for public services due to Alberta’s population growth. Officials said they want to protect core services while managing fiscal challenges. The government also increased tourism levies and introduced a new tax on personal vehicle rentals starting in 2027.
Balancing Priorities and Future Outlook
The budget also includes long-term investments aimed at stabilizing future revenue. Alberta plans to grow its Heritage Fund to strengthen financial resilience and support long-term growth. Analysts say building savings during good years can help counter revenue volatility from resource markets.
Critics argue the deficit risks long-term financial stability, while supporters say the budget balances immediate needs and structural challenges. Many say Alberta must diversify its economy beyond oil dependency to stabilize finances. Observers expect this budget to spark debate about fiscal priorities, spending levels, and long-term economic strategy in the province.
