Alberta finance minister says hands were tied with $9.4-billion budget deficit

CALGARY — Finance Minister Nate Horner says a provincial sales tax is not in the cards as Alberta wrestles with a massive $9.4-billion budget deficit this year, with buckets of red ink expected in the years to follow.

“We’re dealing with lower oil prices, global trade uncertainty, rising construction and operating costs and continued population pressures on infrastructure and services,” Horner told business leaders Friday at the Calgary Chamber of Commerce.

He said cutting his way out of the deficit would leave government with just a handful of ministries, including health and education.

“That’s how dramatic this is,” Horner said.

“No finance minister likes presenting a deficit, but we made a choice.

“We’re not cutting essential services during rapid population growth and we’re not raising personal taxes or introducing a (provincial sales tax) to undermine our competitiveness.”

The deficit is Alberta’s largest since the COVID-19 pandemic and is so far in the red that it breaks rules on fiscal restraint brought in by Premier Danielle Smith’s government just a few years ago.

Horner made the comments a day after introducing the budget, which increased spending in health and education despite the deficit. Alberta’s taxpayer-supported debt is expected to rise over $100 billion by spring 2027.

Political scientist Lori Williams said the deficit alone isn’t likely to reduce popular support for Smith’s United Conservatives.

Williams said of the three options the government said it had in the wake of an oil revenue downturn — hiking taxes, cutting services or running a deficit — the province picked the politically safest route.

But she said a track record of deficits, like the government is forecasting, creates its own problems.

“We know that fiscal hawks, that fiscal conservatives are not happy with this,” said Williams, a professor at Mount Royal University in Calgary.

“The question is how much that resonates with ordinary folks, because we know that Albertans, while they like the idea of low taxes, they don’t want to do without government services.”

Williams also questioned whether the government didn’t have other budgeting options, noting that Smith and Horner have seen higher overall revenue than most of their predecessors.

“That’s certainly going to raise questions amongst those that are paying attention to those numbers,” she said. “If it combines with some of the other things that people are concerned about, it could be quite problematic for the government.”

Asked about tax reform Thursday, Horner said he thought the desire to maintain Alberta’s low tax system probably trumps desires to avoid red ink budgets.

Opposition NDP Leader Naheed Nenshi said Thursday the government deserves political consequences for its string of deficits and for saddling future generations with debt.

The budget is set to hike education property taxes, which are collected by municipalities but transferred to provincial coffers.

That has been a point of tension for years. Municipal leaders argue the province should collect its own taxes rather than make cities and town do it and thereby draw the ire of residents when the tax bill comes in.

Also Friday, Calgary Mayor Jeromy Farkas called this year’s increase unfair and even harmful.

“This is going to trigger an extreme affordability crisis in our city and we cannot abide by that,” he told reporters.

Calgary is the hardest hit by the property tax bump, as government officials say the average homeowner in the city will pay some $340 more as a result. Edmonton’s average homeowner, by comparison, will pay just over $150 more.

Farkas said he could support the province’s tax increase if he felt Calgary would benefit from the dollars being levied, but said there’s a lack of transparency with the large tax increase “being pushed down Calgarian’s throats by our provincial government.”

This report by The Canadian Press was first published Feb. 27, 2026.

— With files from Jack Farrell in Edmonton.

Dayne Patterson and Bill Graveland, The Canadian Press