Alberta Premier Danielle Smith says “significant” deficits are in store for her province as it tries to grapple with low oil prices.
The government’s new budget is set to be unveiled later this month, and Smith says it will be a “tough” one.
The premier told RED FM Calgary this week that she has ruled out tax hikes and “deep” service cuts to avoid hurting Albertans, but said it means the province will need to run multiple deficits.
“We’re still going to prioritize the things that matter to people (like) health care, education, and supports for the most vulnerable, as well as building infrastructure, but we can’t do it all,” she said.
“In the short term, there is going to be some significant deficits as we try to manage the lower royalty prices.”
Financial forecast
As of November, the province was forecasting a $6.4-billion deficit for the current budget year based on a reduced average price of West Texas Intermediate, the North American benchmark oil, at US$61.50 a barrel.
The forecast average is down from the original US$68 per barrel to which the province’s current budget is pegged, with every lost dollar equal to a $750-million dip in Alberta’s treasury.
November’s update pinned the low oil prices to “concerns about global oil demand and easing geopolitical tensions in the Middle East.”
Since then, Smith has also said that boosted oil production in Venezuela following the U.S. capture of the South American country’s former president, Nicolas Maduro, could harm Alberta’s industry.
Alberta’s current budget also forecasts deficits of more than $2 billion over the next two years, but Smith didn’t tell RED FM whether those are now expected to be higher.
Finance Minister Nate Horner said in a statement Tuesday that he couldn’t provide specifics on the budget before it’s tabled, but he said it’s the government’s job to make hard decisions.
“Discipline matters because once it’s gone, services, jobs and stability are put at risk,” Horner said.
“When revenue drops, spending and deficits have to adjust — there’s no way around it.”
Positive outlook on Alberta’s financial future
Smith did say she thought Albertans were “a lot more secure” now, citing weekly earnings in her province compared with others and the province’s unemployment rate, which had shrunk over the past year to 6.4 per cent from 6.8 per cent.
But she said for the foreseeable future, Alberta will still be on the roller-coaster of natural resource revenues that sees the province swing far into the green and crash back down into the red as oil prices jump up and down.
“That’s a problem that got created over decades. It’s a problem I inherited,” Smith told RED FM.
She said the government needs to stick to her plan to grow the province’s rainy-day Heritage Savings Trust Fund to $250 billion, so it can start generating its own revenue to make up for oil crashes.
Smith called for federal tax reform, saying Ottawa “overtaxes” the province. She also said the federal equalization program needs to be reworked so Alberta has more money to address its own priorities.
“Albertans are scratching their heads saying, ‘Hmm, why are we running deficits when we’re sending so much money to Ottawa so that they can give it to other provinces?” she said.
“That’s another conversation we need to have with the federal government to get better balance.”
This report by The Canadian Press was first published Feb. 10, 2026.
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