Lennie Kaplan is a former senior manager in the fiscal and economic policy division of Alberta’s Ministry of Treasury Board and Finance.Premier Danielle Smith once described Alberta’s finances as a disgrace, with Alberta Budget 2026 on the near horizon, it is time to check in to see if this is still the case. Alberta budgeting is highly tied to unpredictable crude oil prices and volatile energy revenues. To measure the vulnerability of Alberta’s finances to movements in crude oil prices, let’s conduct our own three-year fiscal scenario planning exercise as is done regularly within Alberta Treasury Board and Finance.President Donald Trump has indicated that he wants to see a world with $50 per barrel oil, and has taken steps to turn this talk into action by taking control of Venezuela’s oil fields. This scenario seems to be of great concern to the Alberta government, and it should be. Let’s call this fiscal planning scenario the Trump 50 scenario.What would a Trump 50 scenario mean for the Alberta government’s already precarious finances, over the next three fiscal years? Using the sensitivities for crude oil prices disclosed in Alberta Budget 2025, we apply a $50 USD WTI per barrel estimate for crude oil and a $12.00 USD per barrel WTI-WCS differential over the next three fiscal years. The results are very large fiscal shortfalls of $14.8 billion in 2026/27, $15.5 billion in 2027/28, and $13.9 billion in 2028/29, prior to any fiscal adjustments. This is shocking! How could this happen in Alberta, of all places? Given that Alberta’s (current?) fiscal framework does not permit budget deficits for more than three consecutive years, Albertans could be facing a devastating combination of tax increases and spending cuts totaling nearly $14 billion by 2028/29. Since the Alberta government must present a serious three-year plan to balance the books in Budget 2026, what could be on the table to close the $14 billion gap under the Trump 50 scenario?.Well, it appears that a provincial sales tax and/or increases to personal and corporate income taxes are not on the table, at least not at this point in time. It is more likely we could see new and major increases to user fees and licences, and maybe even a return to healthcare premiums. On the expenditure side, the government has talked about a program and grants review of its spending, presumably through the Alberta Productivity Review Cabinet Committee (PRCC). But an up to $14 billion or 16% cut to program expenses is a heavy lift for even the most robust spending review exercise, and there is little to no evidence to suggest that the PRCC exercise will be that robust. Does the current UCP government really have the political will to significantly cut spending in healthcare and education, as Premier Smith once said: “let’s not kid ourselves about where the cuts need to be made” or as former premier Ralph Klein famously once said: "you’ve got to hunt where the ducks are." The Trump 50 scenario is unlikely to occur for a number of obvious reasons. More likely are fiscal adjustments in Alberta between $6.4 billion to $10.2 billion through 2028/29, depending on the future course of oil prices and growth in operating spending. Our fiscal scenario planning exercise does illustrate the major deficiencies found in the Alberta budgeting system, most notably the current Alberta government’s near total dependency on energy revenues to fund its current spending habits, and that should be disconcerting to all Albertans.Sadly, based on my fiscal planning scenario analysis, I must conclude that Alberta’s finances are still a disgrace, as Premier Smith called them back in 2020. The question we need to ask as Albertans in approaching Budget 2026 is whether the Smith government has the political courage to actually change course. 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, program reviews and savings strategies for non-renewable resource revenues. 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.
