Alberta: Budget 2026

Highlights

• As was well telegraphed by the Government of Alberta, the province’s fiscal outlook has deteriorated from this time last year. The deficit is now projected to reach $9.4B in the 2026–27 fiscal year (FY27), up from an anticipated $2.4B deficit in Budget 2025 (graph 1). Deficits should shrink thereafter but remain noteworthy. The provincial government no longer expects to return to budget balance by FY29.
• Lower revenue on the back of declining oil and gas royalties is part of the story. The increased fiscal sensitivity to commodity price swings in recent years has left the province’s finances more vulnerable than ever to global forces. Last year’s personal income tax cut also reduced that typically steadier source of revenues. But modest increases in some fees and levies, income retention in the Heritage Fund, and the build out of the Heritage Fund Opportunities Corp should provide a slight boost and buffer.
• Just as notable as the revenue hit is the increase in spending. Operating expenses are expected to rise by 8.0% in FY26 and 5.0% in FY27, largely on the back of increased funding for healthcare and education. While details on possible savings are scant, the provincial government has said it will explore reducing services to non-permanent residents to cut costs.
• With larger deficits tends to come higher debt, and Alberta’s Budget 2026 is no exception. The debt-to-GDP ratio is expected to gradually rise from 8.3% in FY26 to 12.9% at the end of the outlook. That said, Alberta entered this challenging fiscal time from a position of strength, with the lowest net debt-to-GDP ratio and debt service costs in the country.