A Promise Kept, But Challenges Remain

Alberta Premier Danielle Smith faced some backlash from her political base when a promised personal income tax cut didn't materialize last year. However, in the 2023 budget, the government finally delivered on that promise, despite a significant shift from a projected surplus to a deficit.

Albertans making more than $60,000 a year will save $750 in income taxes, a move that will reduce government revenue by about $1.2 billion in the coming fiscal year. This fulfills a key campaign promise made by Smith during the 2023 election.

Alberta's finances are facing significant challenges. The province's expected surplus of $5.8 billion in the current year has turned into an expected deficit of $5.2 billion in the coming fiscal year, an $11 billion shift.

This change is largely due to a combination of factors, including depressed energy prices and the looming threat of a trade war with the United States. U.S. President Donald Trump has threatened to impose tariffs on goods from Canada and Mexico, which could significantly impact Alberta's economy.

The budget assumes a 15% tariff on Canadian goods, but the province has set aside $4 billion in its contingency fund to help mitigate the potential impact. This fund could also be used to address uncertainty around public bargaining settlements.

Despite the challenges, the budget outlines a path forward for Alberta. The province is hoping to tear down interprovincial trade barriers and is looking for ways to buttress itself against the potential economic pain of tariffs.

The budget is built on the benchmark price of oil trading at an average of US$68 a barrel in the next fiscal year. Overall, Alberta expects revenue to total $74.1 billion and expenses to hit $79.3 billion in fiscal 2025-2026. The province has calculated fossil fuel revenue will total $17.1 billion in the coming year, down $4.4 billion from last year's forecast.