Lennie Kaplan spent over two decades in the Alberta Public Service, including as a senior manager in the Fiscal and Economic Policy Division of the Ministry of Treasury Board and Finance, where he worked on examining best practices in long-term fiscal sustainability analysis and reporting.With the current legislated fiscal framework and unlegislated fiscal anchors now under review, the Alberta government appears to be headed towards establishing a longer-term fiscal anchor for its finances, based largely on increasing oil production. Alberta Premier Danielle Smith says her goal is to eventually achieve balanced budgets, based on a WTI crude price of about $60 USD per barrel, bringing spending in line with revenues over the next decade. I fully support this long-term policy goal, but the way Alberta gets there is critical.In an October 2025 mandate letter, Premier Smith instructed the Minister of Treasury Board and Finance to continue to lower the WTI price necessary for balancing the budget and track that number in every provincial budget, assuming conservative but reasonable economic conditions. Estimates taken from Budget 2026 suggest that, rather than lowering the WTI price needed to balance the budget, the budget’s dependence on oil royalties has deepened, with an estimated $77.50 USD per barrel needed in 2028/29 to balance the budget, up from $70 USD per barrel back in 2022/23.So, what are the implications of this new $60 per barrel longer-term fiscal anchor for Alberta’s budget?Recognizing that the last time the Alberta government publicly released a ten-year outlook of its finances was back in the spring of 2015, we use the fiscal sensitivities found in Budget 2026. On this basis, I estimate that the Alberta government would be facing a budget shortfall between spending and stable revenues of about $12 billion by 2028/29, based on a $61.50 USD per barrel WTI oil price..This scenario assumes conservative but reasonable economic conditions, with crude oil prices averaging $61.50 USD WTI per barrel, a WTI-WCS differential of around $15 USD per barrel, an exchange rate of around 75 cents, nominal GDP growth of around five percent, and employment growth of about 1.7%. This also assumes that 2028/29 operating spending will grow at just 2.3% from the previous fiscal year, a level of spending restraint not shown by the current Alberta government. Finally, we assume a Heritage Fund market value of about $40 billion by 2028/29, generating a rate of return of about six percent, after inflation (or $3.2 billion in 2028/29).A $12 billion fiscal adjustment to spending in 2028/29, in order to bring it back in line with stable revenues, would represent about a 16% cut to operating spending and capital grants. Given the current government’s reluctance to cut operating spending, it appears that the new longer-term fiscal anchor of $60.00 per barrel is based on the strategy of chasing higher royalty revenues through the production of more barrels of oil, at lower crude oil prices. Based on the fiscal sensitivities contained in Budget 2026, I estimate that Alberta oil production (raw bitumen and conventional crude oil) would need to reach around 5.9 million bpd by 2028/29 to generate the estimated total of $22 billion in bitumen and crude oil royalties (this $22 billion is net of gains to corporate income taxes, personal income taxes, and other tax receipts) to balance the budget at $61.50 USD per barrel in 2028/29. This is 1.5 million bpd, or about 35% higher than the 4.4 million bpd government initial projection for raw bitumen and conventional crude oil production in 2028/29. Is this possible? The government needs to provide the answers to Albertans by releasing a prudent ten-year fiscal outlook for the province.I am concerned when Premier Smith said she would prefer to spend unforeseen budget windfalls from increased oil prices on “one-time capital costs,” like infrastructure projects. So-called “one-time capital costs” generally come with ongoing operating costs and need to be carefully planned. In this spirit, I am renewing my call on the Alberta government to amend its fiscal framework to ensure that all cash surpluses arising from a short-term higher oil price environment are allocated solely to repayment of debt and deposits into the Heritage Fund, and not used to support more spending.To conclude, I am fully in support of the goal to reduce Alberta’s budget dependence on oil revenues to get back to a structural fiscal balance. In fact, I have presented a multi-pronged, detailed list of recommendations to do so, including cutting wasteful spending, more efforts at revenue diversification, saving non-renewable resource revenues “off the top” into the Heritage Fund, fixing the fiscal framework, and increasing fiscal transparency and accountability. I am concerned about any fiscal strategy that “puts all the eggs in one basket,” as the Alberta government appears to be doing. Lennie Kaplan spent over two decades in the Alberta Public Service, including as a senior manager in the Fiscal and Economic Policy Division of the Ministry of Treasury Board and Finance, where he worked on examining best practices in long-term fiscal sustainability analysis and reporting. Mr. Kaplan also served as a primary external consultant to the Office of Alberta’s Auditor General on its 2018 commentary, Putting Alberta’s Financial Future in Focus. He was Executive Director to the 2019 MacKinnon Panel on Alberta’s Finances, which made a series of recommendations for strengthening Alberta’s medium to long-term fiscal framework.
