Alberta Projects Major Deficit in 2025 Budget Amid Trade Uncertainty and Tax Cuts
EDMONTON — Alberta’s 2025 budget, unveiled Thursday by Finance Minister Nate Horner, forecasts a significant revenue shortfall, marking the province’s first deficit in three years. The province anticipates a $5.2-billion shortfall for the fiscal year beginning April 1, with deficits of $2.4 billion in 2026 and $2 billion in 2027. The budget cites unpredictable global economic conditions, including hostile U.S. trade policies under President Donald Trump, as key factors driving the financial challenges.
Despite Premier Danielle Smith’s efforts to dissuade Trump from imposing tariffs, the budget projects 10 per cent tariffs on energy products and 15 per cent tariffs on all other goods. These measures, combined with volatile oil prices and international market instability, have created what Horner described as “stormy waters ahead” for the province’s economy.
Education spending increases, but critics say it falls short
The budget includes a 4.5 per cent increase in education spending, bringing the total to $9.9 billion. Of that, $55 million will support new student enrolments in the rapidly growing province, while $1.1 billion is earmarked for hiring new teachers and education support workers.
However, the Canadian Union of Public Employees (CUPE) argues that the increase is insufficient. CUPE Alberta spokesperson Lou Arab said the province needs to boost education funding by 6.8 per cent just to keep pace with inflation and enrolment growth. Arab criticized the budget, noting it is the fourth consecutive year that Alberta has ranked last in education spending among Canadian provinces.
“This amounts to an effective cut,” Arab said, warning that the province’s education system will continue to deteriorate under the current funding model.
Tax cuts delivered, but critics question impact
The budget fulfills a key campaign promise by the United Conservative Party (UCP) to cut provincial income taxes. Starting July 1, individuals earning less than $60,000 annually will be taxed at 8 per cent on that portion of their income. The province estimates the average Albertan will save approximately $750 in 2025 as a result.
However, opposition leaders have criticized the tax cut as inadequate. NDP Leader Naheed Nenshi argued that the savings—amounting to about $2 a day for most Albertans—won’t offset rising costs, such as increases in the education portion of property taxes.
Court Ellingson, Alberta New Democrat Shadow Minister for Finance was highly critical of the 2025 fiscal plans. “This no-plan budget will send Alberta’s economy into complete chaos, and while Albertans desperately struggle to pay their bills, the UCP is making their lives more expensive with 39 increases to taxes and fees” sad Ellingson
Other key budget measures
The budget also allocates $26.1 billion over three years for capital projects, including $1.1 billion more than in the 2024 budget, to address population growth and support economic development. Additionally, the province plans to restructure its health care system by establishing four integrated health agencies aimed at improving patient outcomes.
The Alberta government emphasized its commitment to fiscal responsibility and efficient public service delivery, even as it navigates what it calls “challenging economic conditions.” The budget also highlights efforts to secure Alberta’s economic future by expanding access to new markets for energy, minerals, and agricultural products, as well as strengthening border security with the United States.
Despite ending 2024 on a strong note—with record oil production, high employment, and increased non-residential investment—Alberta’s economic outlook remains uncertain. The province’s reliance on natural resources and its vulnerability to global market shifts continue to pose significant risks, leaving many Albertans bracing for tougher times ahead.
