Highlights
Alberta tabled Budget 2026 yesterday, posting a $9.4 billion budget deficit with no plan to return to balance. Highlights include:
- $10.9 billion in K-12 education, a 7.2% increase from 2025-2026 forecasts.
- $1.2 billion to social services and housing, up 3.7% increase from 2025-2026 forecasts.
- $3.1 billion to transportation and infrastructure, 18% increase from 2025-2026 forecasts.
- $2.8 billion over three years for municipal transportation projects, including Calgary light rail transit projects inclusive of $139 million in funding for the Green Line Transit project.
- $28.3 billion over three years for public infrastructure, a 7.7% increase from 2025-2026 forecasts.
- $1.1 billion to Technology and Innovation, a 10% increase from 2025-2026 forecasts.
- Overall, Budget 2026 represents a balanced investment in delivery of core services while demonstrating fiscal constraint. The Government of Alberta acknowledges a highly uncertain outlook as the global economy navigates reshaping of trade relationships, geopolitical uncertainty, US tariff threats and unpredictability heading into CUSMA renegotiations. Additional risks to the fiscal outlook, such as concerns surrounding the independence of the US Federal Reserve, possible equity market correction related to AI stock valuation, and slow US growth due to reduced consumer demand may further compromise Alberta’s fiscal trajectory.
Programs & investments
Operating costs in the 2026-2027 fiscal year are projected to be $81.9 billion, an increase of $2.7 billion year over year. Generally, operating cost Increases are due to increased demand on services from population growth, investments in both health care and education and settlement of compensation agreements.
Notable investments include:
- $1.3 billion increase to health care, providing additional funding for physician recruitment and compensation, centralizing services, expanding surgical capacity, empowering nurse practitioners and protecting seniors’ benefits.
- $722 million increase to education with an average 3.5% increase by 2028-2029 to support enrolment growth, teachers’ compensation settlement and initiatives to manage class size and complexity.
- $115 million for skills and training programs and workforce initiatives to help attract and develop skilled workers.
- $2.6 billion over three years for cities to invest in core infrastructure through the Local Government Fiscal Framework, including $808 million for Calgary.
- $25 million over three years, maintaining support for Indigenous entrepreneurship through the Indigenous Reconciliation Initiative and the Aboriginal Business Investment Fund.
- $385 million over three years for the Innovation Employment Grant Program.
- $7 million to support a pre-feasibility study of a bitumen pipeline to the west coast of British Columbia.
- $87 million over three years for the Alberta Petrochemical Incentive Program.
- $20 million for small business support and regional economic development.
- $27.5 million allocated to the Investment and Growth Fund to support projects across promising industries.
- Establishing the Premier’s Investment Council to develop a cohesive approach to investment attraction.
- $2.7 billion for post-secondary operations, an increase of $148 million from 2025-26, including investments in the University of Calgary’s Multi-Disciplinary Hub and the School of Veterinary Medicine to increase capacity.
- $24 million for continued implementation of the Alberta Provincial Police Force.
- Funding for previously announced capital grants for arts infrastructure in Calgary, including $42 million for Werklund Centre and Contemporary Calgary and $4.5 million for the Alberta Foundation for the Arts
- $80 million for the Broadband Strategy, increasing connectivity across the province.
- $446 million increase in capital grants, primarily for the Edmonton and Calgary light rail transit projects inclusive of $139.1 million in funding for the Green Line Transit project.
- Long term goal to put $1.1 billion toward expanding and connecting Calgary’s light rail transit network to the airport.
- $168 million in 2026-207 to Deerfoot Trail upgrades.
- $962 million to maintain childcare costs at $15/day, Alberta’s financial commitment to the Early Learning and Child Care agreement with the federal government as previously announced.
Taxes and fees
Revenue of $74.6 billion is projected in 2026-2027, reflecting a $7.9 billion decrease over 2024-2025 revenues, resulting primarily from low commodity prices. Alberta is introducing several other tax measures, including:
- Education Property Tax increasing 7.2% from the 2025-2026 forecast to cover one third of Education and Childcare’s education related operating expense target. Homeowners in Calgary will see a $340 increase for a median household on top of their property tax and $4.17 per $1,000 of equalized assessments for non-residential properties (an increase of $0.17/$1,000 of equalized assessments).
- The tourism levy rate will increase from 4% to 6%, effective April 1, 2026. This is projected to bring in $200 million in revenue in 2026-27, growing to $214 million by 2028-29.
- A data centre levy (effective 2028-2029) will create a new revenue stream of $102 million by 2028-2029
- Vehicle rental tax (effective Jan 1, 2027) introduces a 6% tax on short term rental vehicles and expected to generate $36 million in its first year of implementation.
- Energy industry levies increase in 2027-28 due to the application of the 7% escalation under the Orphan Well Abandonment model.
- TIER revenue is forecast at $166 million in 2026‑2027, and $216 million in 2028-2029 – down from the forecasted $304 million in 2025-26. The forecast reflects continued high usage of emission performance credits and offsets in the near term, with compliance payments increasing in the future.
Alberta’s fiscal picture
- Alberta’s 2026-2029 presents a period of protracted deficits. The government anticipates a deficit of $9.4 billion for fiscal year 2026-2027, part of a cumulative $23.9 billion projected shortfall over the next three years.
- Economic growth is expected to slow in 2026 with modest gains in 2027 and 2028 (base assumption of 1.8%, 2.3% and 2.2% respectively).
- Persistent deficits and increased capital spending will put net debt-to-GDP on an accelerated upward trajectory, from 7.2% in 2024 to 12.9% in 2028-2029, breaching the 10% threshold but remaining the lowest across the Canadian provinces.
- The government has limited expenditure growth to 2.7% per year over the next three years.
- Taxpayer supported debt is projected to grow 66% from 2024-2025 levels by 2028-2029.
The bottom line
The deficit budget tabled by the Alberta government reflects the province’s continued reliance on non-renewable resource revenue, alongside the need to invest in services and infrastructure to meet the needs of a larger population base. Through Budget 2026, the provincial government rightly chose to focus on supporting the core services Albertans rely on most: healthcare, primary and post-secondary education, infrastructure and workforce development. Overall, the budget represents a balanced investment in the delivery of core services, amidst economic challenges arising from both the drop in non-renewable resource revenues and ongoing geopolitical and economic uncertainty. At the same time, significant protracted deficits signal the need for new, meaningful and predictable revenue streams to ensure long-term stable funding.
