Alberta budget slated to run in red for next 3 years as 2026-27 deficit balloons to $9.4B

The province announced Budget 2026 on Thursday, and while health care and education will see increased spending, Alberta will also run a $9.4 billion deficit.

Alberta is breaking its own fiscal rules.

Nate Horner, the province’s finance minister, said Wednesday the government plans to run deficits over the next three fiscal years: $9.4 billion for 2026-27 followed by $7.6 billion in 2027-28 and $6.9 billion in 2028-29. The province will post a $4.1-billion deficit for the 2025-26 fiscal year ending in March.

It is the second deficit in a row from the governing UCP, coming two years after Alberta enjoyed a surplus of $8.3 billion in 2024-25.

The budget comes as the province pledged to increase spending in several areas, including health care, education and infrastructure, while it forecasts revenue from oil to bottom out this coming year before rising the year after.

The province introduced a fiscal framework three years ago mandating it to present balanced budgets and limit year-over-year operating expense growth, a requirement that can be broken if an unexpected disaster occurs, revenue declines by $1 billion or more, or if revenue is expected to decline below the prior-year third-quarter expense forecast.

Horner says the government, aware it’s projecting “significant” deficits, will review its fiscal framework “and likely amend it in the fall.”

“Technically, we’re not breaking the rule until the third consecutive deficit actually shows up in that year’s annual report, but it shows the work isn’t done,” Horner told reporters during a media briefing on Wednesday afternoon. “There are three levers here for government and for Alberta, it’s revenue, it’s expenses, and it’s deficits. I’m sure it’ll bring forward a lot of conversations about where we go from here.”

That work is partly about trying to catch up to Alberta’s recent population surge, which is expected to slow down in the coming years.

“The last time we saw this kind of population growth was in that 2003 to 2008 period (when) we saw about an 11-per-cent increase ... but we saw a corresponding 24-per-cent increase in the economy and GDP (gross domestic product),” Horner said." Around 2019 to 2025, we saw a 13.5-per-cent increase in population growth and only an eight-per-cent increase in GDP for the economy, so some of these things take time."

The Opposition Alberta NDP criticized the budget, saying in a media release it “makes life more expensive for Albertans amidst already rising costs,” pointing out increases to property taxes and to fees for seniors living in continuing care, vehicle registration, small businesses and trade certification.

“There’s nothing in (the budget) that reduces people’s cost of living. There’s nothing in here that builds things that people need. There’s nothing in here that solves people’s problems,” Naheed Nenshi, leader of the Alberta NDP, told reporters at the legislature on Thursday. “This is a placeholder budget with a strategy of ‘cross your fingers and hope the price of oil goes up.’”

Speaking of oil, compounding the impact on the budget are relatively low forecast prices for the non-renewable resource that has long driven Alberta’s economy.

Compounding the impact on the budget are relatively low forecast prices for oil.

Provincial economists projected the prices for a barrel of West Texas Intermediate crude at US$60.50 for 2026-27, a $1.50 drop from its 2025-26 estimate and an almost $14 dip from two years prior. The price is forecast to rebound in 2027-28 to $67.50.

Horner said every $1 drop in the price of crude takes $680 million from the province’s bottom line.

The province’s projected revenue is down by $742 million from the third-quarter forecast to $74.6 billion, adjusted to reflect shifts in sentiment given uncertainty in economic markets.

While growth is forecast to slow down – the province’s population is expected to increase by 1.1 per cent in each of the next two years – Alberta’s economy is expected to outperform those of other provinces.

Tax revenue is expected to rise by $1.7 billion from increases in personal income and education property taxes, and with a rise in population, Alberta’s revenue from federal transfer will increase by 5.6 per cent to $9.2 billion.

News of the projected deficits comes as the government increases spending across the board, including in major areas such as health care, education and infrastructure.

Overall, the budget provides $34.4 billion for provincial health care services, an increase of $1.66 billion, across its four agencies. The budget allocates $13.8 billion to Hospital and Surgical Health Services, $12.6 billion to Primary and Preventative Health Services, $2 billion to Mental Health and Addiction, and $5.8 billion to Assisted Living and Social Services. The province is also spending $13.8 billion to operate and expand hospitals, surgeries, emergency services, and diagnostics.

The health budget includes $2.3 billion for a new crown corporation called Health Shared Services, which will centralize functions of the four provincial health pillars, such as information technology, finance and human resources, among other support services.

Operating expenses for education will cost the government $10.8 billion, an increase of $722 million, for 2026-27, and forecasts spending $11.5 billion on them by 2028-29.

Minister of Education and Childcare Demetrios Nicolaides said on Wednesday the increase in funding over the next three years will go toward building schools and “helping to hire more than 5,000 teachers, educational assistants and support staff.”

More budget highlights

• The province’s capital spending plan is forecast at $28.3 billion over the next three years, a rise of $2.2 billion from last year’s budget;
• Although the province is forecasting deficits the next three years, meaning there’s no surplus cash being put into the Alberta Heritage Savings Trust Fund, Horner said the fund is on pace to reach its target of $250 billion by 2050. He said Wednesday the fund is worth about $30 billion, almost double its size from 2019-20;
• Children and Family Services’ budget increases by $63 million to $1.7 billion for 2026-27, including $405 million (up $30 million) for the Alberta Child and Family Benefit.
• Municipal infrastructure projects receive $7.1 billion over the next three years;
• The province will introduce a tax of six per cent on rental vehicles, excluding long-term leases and non-passenger rentals;
• Tourism levies applied to hotel rooms and other short-term accommodations will increase in April to six per cent from four.