The Alberta government has released its first-quarter fiscal updates for 2025, and it predicts the province will run a $6.5-billion deficit in 2025-26, up $1.3 billion from the spring budget’s forecast.This could mark Alberta's first deficit in five years if trends continue. The increase has largely been driven by a 38% decline in natural resource revenues, which have fallen from $25.2 billion in 2022-23 to a forecast of $15.7 billion, with oil forecasted to average $63 USD per barrel, down from more than $89 in 2022."Our commitment has been to use surpluses appropriately — to improve our net fiscal position through debt repayment or savings in the Heritage Fund. By managing surpluses this way, we can weather some of these deficit cycles." Nate Horner, Treasury Board President and Minister of Finance, said on Thursday."I don’t want to immediately match our spending when oil is at $80 a barrel. Likewise, I’m not going to cut our spending to match $63."We’re going to have to weather some of this, but I think fiscal rules will help us."Population growth — which is expected to climb another 2.4% this year — has added to this pressure, along with continuing lower oil prices, tariff threats, slower worldwide economic growth, and geopolitical instability.Job gains have led the government to revise its employment growth forecast to 2.5% this year, 0.6 percentage points higher than in the budget.However, Alberta's rapidly expanding labour force continues to put upward pressure on unemployment.“We now expect the unemployment rate to average 7.2% this year, down slightly from our budget forecast of 7.4% but still higher than last year's level,” a government spokesperson said..UPDATED: Alberta's 2025 budget bleeding red despite vast natural resources — tax cut introduced for some residents .Despite these challenges, the government says the province remains strong and is committed to prioritizing essential services such as education and health care while keeping everyday costs like childcare, housing, and utilities affordable for families.“Albertans should be prepared for a government that is looking at everything and doesn’t want to be an outlier in any way regarding spending," Horner said. "A lot of our programs are still the highest in the country.”More than half — $2.5 billion — of the $4-billion contingency fund set aside in Budget 2025 remains available to respond to unforeseen costs.Allocations include $706 million being spent on disaster and emergency response, including $700 million for wildfires and $6 million for replanting trees.Another $752 million has gone toward rising expenses not offset by dedicated revenues.The province maintains the economy remains among Canada’s strongest, with a government spokesperson saying they now forecast “real GDP growth of 2% in 2025, which is up from 1.8% at budget. While Alberta is expected to outpace the rest of the country, growth will still be below last year's pace of 2.7%.”Alberta’s taxpayer-supported debt is now forecast at $84.3 billion, up $1.7 billion from the budget, while debt-servicing costs will rise to $3 billion, an increase of $37 million.Financial assets are projected to fall to $85.2 billion by Mar. 31, 2026, a decrease of $12.8 billion from the prior year..Alberta to table Budget 2025 amid population boom, economic uncertainty .Operating expenses are now forecast at almost $65 billion, up $679 million from Budget 2025, mainly due to higher public-sector wage costs.Meanwhile, the Heritage Savings Trust Fund and other endowments are forecast to grow by $2.8 billion in accumulated surpluses, with investment income fully retained.However, no new surplus cash is expected to be available for allocation by the end of 2025-26.“We know the road ahead has its challenges, but with disciplined financial management and smart investments, we will stand by families, rein in the deficit, and secure a stronger future,” Horner said.The budget forecast had originally assumed tariffs of 15% on most Canadian goods and 10% on energy products, along with Canadian retaliatory tariffs on broad consumer goods.“The tariffs that have actually materialized on Canada, however, have been less severe than anticipated,” a spokesperson said.“The majority of Alberta's exports are compliant under the Canada-US-Mexico (CUSMA) Agreement, and thus tariff-free.”The effect of the US tariff rate on Alberta sits at around 3%, currently the lowest among provinces.“Our standing reflects Alberta's export composition toward a large share of energy products. Alberta is also relatively less exposed to US tariffs on steel, aluminum, and autos compared to other provinces,” the spokesperson said.“While [the latest developments on tariffs] have not been factored into our outlook, this should help lessen the tariff impact on the Alberta economy going forward.”.The Canadian Taxpayers Federation is urging the Alberta government to cut spending..“Premier Danielle Smith needs to start saying ‘NO’ a lot to pull Alberta out of this debt plunge,” said Kris Sims, CTF Alberta Director. “Albertans are paying more than $3 billion this year in debt interest payments — that’s the cost of three new hospitals.”“Alberta can’t just say it’s doing better than other provinces on its budget - that’s like being proud of being the most sober person in the drunk tank,” said Sims. “The government can’t be doing things like handing out buckets of taxpayer cash to billionaire-owned hockey teams when its more than $84 billion in debt. “The Alberta government must focus on reducing the size and cost of government to stop wasting taxpayers’ money on debt interest payments.”
