KAPLAN: Alberta’s Budget 2026 is a stress test for government credibility

Fiscal discipline, transparency, and accountability are important to the credibility of any government’s finances, and it should be an especially critical focus this year, with the presentation of the Alberta 2026 budget, scheduled for February 26. The Alberta government now appears to be focusing on what it calls a “deliberate and disciplined approach” to spending and revenue generation. What this all means is one of the compelling questions that needs to be answered on February 26. Perhaps we will receive some clues from Premier Danielle Smith’s TV Address to Albertans.We all know that Alberta’s finances are in peril. I estimate, based on my most recent updates to key economic and price indicator benchmarks from private sector forecasters, most notably expectations for WTI crude oil prices, that Alberta fiscal shortfalls (that is, shortfalls prior to fiscal adjustments) could be $10.6 billion in 2026/27, $8.6 billion in 2027/28, and $7.9 billion in 2028/29. This assumes Alberta’s operating spending increases by the combined annual rate of growth of inflation and population limit (estimated at 3.6% per year) over the next three years.Alberta’s current fiscal framework permits allowable budget deficits for three years (in this case, from 2025/26 to 2027/28). Allowable deficits under the fiscal framework are estimated at $6.6 billion in 2026/27, $1.9 billion in 2027/28, and zero in 2028/29.As a result, Albertans could well be facing fiscal adjustments of up to $4 billion in 2026/27, $6.7 billion in 2027/28, and $7.9 billion to get back to balance. Since the Alberta government must present a three-year plan to balance the books in Budget 2026, what could be on the table for fiscal adjustments to close an estimated $4 billion gap in 2026/27, $6.7 billion gap in 2027/28, and $7.9 billion gap in 2028/29?.While the Alberta government seems very reluctant to put any major revenue diversification initiatives on the table, new and increased user fees and licences, and applying a “user pay” principle to more government programs and services seem a distinct possibility.However, let’s focus on the expenditure side of the ledger, where the prospects of increased means testing and more stringent eligibility requirements for programs and services are now on the table, it appears.In October 2025, the Smith government talked about a program and grants review of its spending, presumably through the existing “cost-cutting” cabinet committee, known as the Alberta Productivity Review Cabinet Committee (PRCC). The PRCC was quietly established by the Smith government in the spring of 2024 and tasked with evaluating and measuring the efficiency and effectiveness of programs and services, identifying initiatives for savings, and focusing resources on the government’s core priorities.But, the PRCC has been working in relative secrecy for two years, and Albertans have seen little in terms of tangible results. A recent Access to Information (ATI) request to Executive Council on work done by the PRCC does reveal 131 (of nearly blank) pages with apparent communication between a number of senior officials within the Alberta government, a reference to a philosophical change in approach to PRCC this year (what is termed Program and Service Delivery Initiatives), and strategies to mitigate associated pressures, but little else..Although Alberta has reviewed some of its programs and services over the past 20 years, these efforts have been fragmented, reactive to crises, limited in scope, and have lacked permanence. What makes this PRCC-led exercise any different? It is hard to know because we have not seen any evidence, but perhaps we will see something in Budget 2026.Albertans deserve to know what expenditure adjustments are going to be made in healthcare, K-12 education, advanced education, seniors’ programs, and social services through PRCC-led program review. The government must be completely transparent with Albertans about how these decisions are being made, and it should not hide behind a veil of secrecy. With all this in mind, what information on the PRCC’s program review process should be presented in the Budget 2026 documents?I am calling on the Alberta government to provide a chapter and an accompanying annex on the work of PRCC-led program review in the budget documents, similar to what the federal government did with the Comprehensive Expenditure Review (CER) in its 2025 budget. As well, a separate and detailed stand-alone report should be released after fiscal year-end, possibly in conjunction with the release of the Government of Alberta’s Annual Report.As for content and substance, a good guide to what should be included in the PRCC-led program review documents in Budget 2026 is the Parliamentary Budget Office (PBO) recent comments on the federal government’s CER exercise. PBO says, “spending reviews should clearly define the scope, methodology, and expected savings, as well as the anticipated effects on personnel and service levels. Transparent reporting on implementation and outcomes is essential to assess whether planned savings are achieved and at what cost to service delivery…In the absence of such detail, it is difficult to assess the fiscal and operational risks to achieving the stated savings.”The Smith government’s recent record on fiscal transparency and accountability has been less than stellar. In 2024, the Alberta government quietly eliminated the requirement for a full three year, mid-year fiscal and economic update and then failed to provide a three year fiscal update at the end of November 2025. Will the results of the PRCC-led program review presented in Budget 2026 be any different? I sure hope so for the sake of fiscal discipline, transparency, and accountability to Albertans.Lennie Kaplan is a former senior manager in the fiscal and economic policy division of Alberta’s Ministry of Treasury Board and Finance, where, among other duties, he examined best practices in fiscal frameworks and program reviews. In 2019, Mr. Kaplan served as executive director to the MacKinnon Panel on Alberta’s finances—a government-appointed panel tasked with reviewing Alberta’s spending and recommending reforms.

KAPLAN: Alberta’s Budget 2026 is a stress test for government credibility

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