Alberta Unveils $5.2B Budget Deficit Amid Economic Uncertainty—Could Rise to $8.7B Under Tariffs
The Government of Alberta has unveiled its 2025-26 budget, forecasting a $5.2 billion deficit, with a potential increase to $8.7 billion under a worst-case tariff scenario stemming from new U.S. trade policies. The budget focuses on economic resilience, providing tax relief to Albertans while making strategic investments to address ongoing fiscal challenges.
Finance Minister Nate Horner introduced the budget while acknowledging economic uncertainties, particularly in light of impending U.S. tariffs on Canadian exports, set to take effect on Tuesday, March 4. The worst-case scenario outlined in the budget suggests these tariffs could lead to:
- $3.5 billion in lost revenue in 2025-26.
- 90,000 job losses over the next three years.
- A 15% average tariff rate affecting industries beyond oil and gas.
“Alberta’s government is making responsible, though difficult, decisions to fund the priorities of today,” said Minister Horner. “We must ensure we remain steadfast in the face of economic headwinds while delivering on our commitments to Albertans.”
Despite fiscal challenges, the budget includes a tax reduction for Albertans earning under $60,000, fulfilling Premier Danielle Smith’s 2023 election promise.
- The new 8% tax rate will save Albertans up to $750 annually.
- The policy will cost the government $1.2 billion in revenue for 2025-26.
To support Alberta’s financial stability, the government has also doubled its contingency fund to $4 billion to address potential impacts from tariffs, wildfires, and public sector wage increases.
The budget forecasts continued three-year deficits, driven largely by a $4.4 billion decline in oil and gas revenue compared to previous projections.
- West Texas Intermediate (WTI) oil prices are expected to average $68 per barrel in 2025-26, a $6 drop from last year’s forecast.
- Non-renewable resources account for 23% of Alberta’s total revenue, highlighting the need for economic diversification.
- Provincial debt is projected to reach $83 billion by the end of the fiscal year.
The Alberta government is restoring municipal grants, reversing a 2020 funding cut that impacted local governments.
- Funding will be restored to 75% in 2025-26 and fully reinstated in 2026-27.
- Edmonton, which experienced the largest funding impact, will see direct benefits from this increase.
The budget also allocates $25 million for border security, strengthening patrols along the Alberta-Montana border in response to security concerns raised by U.S. officials.
The Alberta government remains committed to fiscal responsibility, job creation, and economic stability. With a focus on strategic investments and tax relief, the 2025-26 budget aims to navigate economic challenges while supporting Albertans and businesses.