Alberta’s budget outlook in the second-quarter update remains consistent with the challenging forecast provided earlier in August. Finance Minister Nate Horner predicts a $6.4 billion deficit by the end of the fiscal year, marking an increase of $1.2 billion from the initial estimate in the 2025-26 budget released in February. The update attributes the growing deficit to weakening oil prices, with a notable 30% decline in natural resource revenue compared to the previous year.
The update anticipates that oil prices will continue to be low, with a $28 US per barrel drop since 2022. Horner emphasized the province’s increasing reliance on fossil fuels in the past decade, noting that every one-dollar change in oil prices significantly impacts Alberta’s revenue. Despite external factors affecting the economy, Horner stressed the importance of controlling spending to safeguard essential services for Albertans.
Population growth and high unemployment were highlighted as additional challenges impacting the economic outlook. On a positive note, Horner mentioned that oil production has remained at record levels, and Canada has expanded exports to Asian markets. The slightly improved fiscal outlook was attributed to larger federal transfers adjusted to align with Alberta’s population growth.
With more deficit budgets projected in the future, Horner emphasized the need for tough decisions ahead. Prioritizing education and healthcare, alongside addressing volume-driven pressures, will be crucial according to Horner. The NDP shadow minister for finance, Court Ellingson, expressed concerns about high unemployment and a relatively low minimum wage hindering Albertans from benefiting from the province’s economic growth.
While the government’s focus on health care and education was acknowledged, Ellingson criticized instances where money could have been saved, citing expenses on privatizing lab services and controversial children’s medicine stockpiling. The fiscal update revealed that $881 million from contingency funding was utilized for new labor agreements this budget cycle, including deals for teachers and healthcare workers. Out of the $4 billion earmarked for emergencies, $1.7 billion has already been spent.
The update also highlighted overall spending of $79 billion, a slight increase from the previous budget, but a significant $5.3 billion rise from the previous year’s expenditure. Notably, the update coincided with the announcement of a memorandum of understanding between Alberta and the federal government regarding a pipeline to the West Coast, signaling potential positive developments in the future. However, Horner cautioned that the benefits might not materialize until actual construction begins, with limited impact expected in the current and upcoming years.