Provincial Finance Minister Nate Horner warned a hall full of Alberta mayors and councillors that the province’s persistent deficit woes will mean municipalities shouldn’t expect extra support in the 2026 budget.
Horner made the comments Friday at the Alberta Municipalities conference in Calgary, during a question-and-answer session with multiple ministers in Premier Danielle Smith’s cabinet.
Many civic politicians came to the hall’s microphones to ask about highway upgrade projects in their regions or other infrastructure needs.
Horner warned them to temper any expectations, given the province’s currently forecast $6.5-billion deficit for the current year, lower-than-predicted oil prices and various pressures in the rapidly growing province.
With oil prices expected to stay low in coming years, it’s “gonna be a tough go” with more provincial debt and deficit on the horizon, Horner said.
“Nobody’s coming on a white horse to save you,” Horner told the municipal gathering. He added that he doesn’t expect anybody to ride to the rescue of Alberta’s fiscal situation, either.
Slumping revenue for the provincial government stands to have downdraft impacts on Alberta’s cities, towns, villages and counties. The province’s infrastructure grant program for municipalities, known as the Local Government Fiscal Framework, rises and falls alongside provincial finances.
Alberta dispersed $820 million in the program in this year’s budget, up 13 per cent over last year, but declining oil and gas royalties could lead the province to cut grants in the coming year.
The formula allows municipalities to share in Alberta’s prosperity when times are good, but they also share in the hard times, Municipal Affairs Minister Dan Williams told reporters at the convention’s end.
“I’m open to new and innovative solutions, but it’s not going to come from a big dump of money from some other government,” he said. “It’s going to be us together, making the hard decisions and figuring it out together.”
Dylan Bressey, the Grande Prairie city councillor newly named as the president of Alberta Municipalities, said councillors back the upside/downside balance the grant formula strikes, but the grant levels remain inadequate to fulfill the need for local roads, parks and other infrastructure.
“There’s not enough money in the pot overall,” he said.
The province’s hospitals, highways and schools have strained from the pressures of the last few years of rapid population growth, both due to rising immigration and an influx of newcomers from other provinces that the Alberta government encouraged to move here.
The Smith government has tried responding to this challenge with a major new school construction program, and Assisted Living Minister Jason Nixon told the convention to expect the largest-ever expansion of continuing care facilities in provincial history in the next budget.
But the finance minister cautioned that between those growth projects and new hospital projects, the province’s capital plan is “probably maxed” out, and that there’s little room to say “yes” to additional requests.
If the Alberta budget’s oil price forecast was off by $1 US a barrel in 2015, revenues rose or fell by $170 million. Today, the impact is worth $750 million. (Hasan Jamali/Associated Press)
Alberta set its budget assuming benchmark oil prices would average $68 US per barrel this year. But Horner revised the estimate to $63.75 in August, sending the year’s anticipated deficit up by $1.5 billion.
Despite perennial projects to diversify Alberta’s economy beyond oil and gas, the province’s own finances have grown increasingly reliant on fossil fuels. For every one-dollar change in oil prices, Alberta’s revenue rises or falls by $750 million. That sensitivity is up from $630 million a year ago, and in 2015, that $1 oil price bump was worth $170 million.
The minister will again revise Alberta’s fiscal picture in late November, ahead of the scheduled release of next year’s budget in February.