Alberta's $5.2B budget deficit could jump to $8.7B under worst-case tariff scenario

Alberta is forecasting it will end the next fiscal year with a $5.2 billion deficit but that could soar to $8.7 billion under a worst-case tariff scenario outlined in Thursday's provincial budget.

Finance Minister Nate Horner introduced the budget for the 2025-26 fiscal year amid great uncertainty for Alberta and Canada, just days before the U.S. tariffs are set to come into effect. 

"Alberta's government is making responsible, though difficult, decisions to fund the priorities of today," Horner said at a news conference prior to tabling the budget. "We must do the right things to ensure we remain steadfast in the face of oncoming headwinds."

U.S. President Donald Trump said the tariffs — 10 per cent for Canadian oil and gas and 25 per cent for all other exports — are coming on Tuesday. 

The Alberta budget outlines three scenarios. There are best-case, worst-case and middle ground scenarios that the document is based on.

Alberta government officials estimate the worst scenario could result in a loss of $3.5 billion in revenue in the 2025-26 fiscal year and cost 90,000 jobs over the next three years. 

Estimates in the budget are based on the assumption that average tariff rate for sectors outside of oil and gas will be 15 per cent over the year.

Horner said he thinks that assumption for the non-oil and gas sectors is a "reasonable place to be," given the uncertainty. 

 "We think 15 per cent is a sustainable rate that could be left in," Horner said. "It could be 25 per cent for a few months and come back to zero. This has to be an average of the entire fiscal year. So we think this is a prudent place to budget from."

The government is introducing a lower, eight per cent personal tax rate on income under $60,000, which was promised by Premier Danielle Smith in the 2023 election campaign. The government says it will save Albertans as much as $750.

The tax cut will cost the government $1.2 billion in the 2025-26 fiscal year. 

There will also be a tax hike on the portion of municipal property taxes that goes toward education.

The budget predicts three years of deficits, largely due to a $4.4 billion decrease in oil and gas revenue from what was forecasted in the current year's budget. Non-renewable resources make up 23 per cent of the province's current revenue.

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