Premier Danielle Smith’s UCP government has introduced a new Alberta budget that carries an eye-popping $9.4-billion deficit as the province, after decades of trying to get off a roller-coaster of oil revenues, seeks to manage the ride and weather the whiplash.

The deficit is the largest since the COVID-19 era, a time of global economic catastrophe that saw oil prices trade in negative numbers.

Finance Minister Nate Horner says the costs of a rising population coupled with low oil prices are hammering the province’s bottom line and stretching capacity.

But he says now isn’t the time to ratchet back spending on core services. The budget will see spending increases in health and education. While income taxes aren’t increasing to make up the shortfall, there are several other ways Albertans will be paying more through fees and changes to the education property tax.

Consumers will also pay more on a number of items, from dangerous driving tickets to registry fees and car rentals.

“Our balance sheet is in better condition than that of many Albertan households. So we’re going to weather this for them and keep an eye towards the future,” Horner told reporters Thursday before introducing the budget in the house.

The province projects West Texas Intermediate – the lifeblood benchmark oil price for Alberta’s economy — to average US$60.50 a barrel in the upcoming fiscal year: not nearly enough to balance the books.

Horner said if oil prices stay low indefinitely, the structural deficit will become “extremely obvious” but that he doesn’t have a mandate to tinker with the province’s tax system now.

Alberta doesn’t have a provincial sales tax and has comparatively low business and personal taxes.

Earlier this week, Horner said a five per cent provincial sales tax in an economy like Alberta’s could drive about $6 billion in revenue, but he’s not promoting a referendum on a potential PST “right now.”

“We’ve got to take Albertans with us on this ride,” he said Thursday. “If Albertans want to give up some of that advantage to get off the roller-coaster, that’s a conversation we can have.”

The deficit also breaks a threshold for going into the red legislated by Premier Danielle Smith’s United Conservatives. When asked what the consequences are for blowing past the government’s own fiscal guardrails, Horner said the consequences are “political.”

“We created these rules, and I’m breaking them. So it bothers nobody more than it does me.”

While Horner acknowledged population growth is slowing, the province still needs to “catch-up” to demands in infrastructure, including hospitals and schools.

Health-care spending is going up almost six per cent, or $1.9 billion, bringing it to $34.4 billion. Education funding is being boosted by seven per cent from the previous year, for a total of $10.8 billion.

The changes come as pressures on emergency rooms sparked stories of suffering and potentially preventable deaths, and after teachers were ordered back to work in the fall amid a rancorous strike in which they demanded action on overcrowding and complex classrooms.

Smith’s government is also aiming to grow the nest egg Alberta Heritage Savings Trust Fund to at least $250 billion by 2050, in hopes that annual investment returns will start to generate a new reliable revenue stream.

The fund is expected to grow to about $34 billion by the end of 2026-27, up from $31.5 billion from the 2025-26 second-quarter fiscal update.

There will be fewer provincial supports for the province’s growing motion picture industry, as the government has reduced the Film and Television Tax Credit by $35 million to $60 million.

It comes after last year’s budget 2025 committed $235 million over the ensuing three years to the FTTC program designed to attract large-scale productions.

This is the second deficit in a row from the UCP, after the province careened from a surplus of $8.3 billion in 2024-25.

For the fiscal year ending in March, the province is forecasting a smaller than expected deficit of $4.1 billion.

As the budget looks forward to 2028-29, there’s no projected balance on the horizon.

Taxpayer-supported debt is now expected to soar to $109 billion in the province with a population of five million.

Smith has said Alberta is under strain as more people arrive, but those numbers are levelling off.

After the province gained 220,000 residents in 2023-24, data from Statistics Canada shows immigration and migration levels to Alberta dropped considerably. Of that total, just over 100,000 were non-permanent residents, such as international students, temporary foreign workers and family members.

Population growth is expected to slow sharply in 2026-27, and the province is seeing net outflows of non-permanent residents.

Oil prices for decades have been both a golden goose and an albatross for Alberta, as successive governments promised to try to diversify the economy to avoid reliance on steep swings in revenue tied to oil prices.

Horner said every $1 drop in the WTI price now carves out about $680 million from the province’s bottom line.

As recently as last year’s throne speech, Smith’s government indicated that oil is and will remain the key driver.

“The vast majority of Albertans do not want deep and disruptive cuts, nor do they want declarations of economic emergency used as a pretext for a proliferation of government programs and spending,” Lt.-Gov. Salma Lakhani told the house at the time.

“They want calm, steady and smart fiscal leadership until the dip in energy prices inevitably passes, as it always does.”

Here are some of the highlights

— The government expects to take in $74.6 billion while spending $83.9 billion (including $2 billion set aside as a contingency fund).

— It predicts a $9.4-billion deficit, the largest since the COVID-19 crisis when the budget came in nearly $17 billion in the red for 2020-2021.

— This is the second deficit under Premier Danielle Smith, with a $7.6 billion deficit projected for 2027 and a $6.9 billion deficit for the year after that.

— Taxpayer supported debt is set to increase by nearly $17 billion, reaching almost $109 billion in 2026 and almost $138 billion by 2029.

— Spending on education and health care is boosted at rates higher than the rate of population plus inflation (pegged in the budget at 3.7 per cent).

— Big ticket spending on education at $10.8 billion (7.2 per cent more than last year) and health care at $34.4 billion (5.8 per cent more than 2025-2026).

— A tax is to be introduced in 2027 on personal rental vehicles. It’s to be set at six per cent of the price of the rental before other taxes are calculated. Long-term leases and non-passenger rentals, like moving trucks, are to be excluded.

— A mandatory tourism levy applied to hotel rooms and other short-term accommodations rises in April to six per cent from four per cent.

— Fees and penalties are going up for some driving offences, corporate registry filing and licensing, and registration for businesses and charities

More to come…

— With files from Karen Bartko, Global News and Aaron Sousa, The Canadian Press