Nate Horner's deficit spending, tax cutting confused conservative budget
Alberta goes for another ride on the royalty roller coaster
After twenty years of writing about Alberta politics and about same number of provincial budgets, it’s sometimes hard not to write the same thing year after year: Alberta relies too heavily on revenues from oil and gas royalties to fund the daily operations of government.
That’s the baked-in analysis of Alberta politics. Our provincial government’s over-dependence on oil revenues is both a blessing and a curse. When the price of oil is high, things are really good. When the price of oil is low, it’s really bad. It is the central component of what we used to call the “Alberta Advantage.”
Alberta has been able to afford to have the lowest taxes in Canada and high spending on public services because the government could use oil and gas royalties to offset what every other province would normally collect through taxes.
Former Premier Jim Prentice described it as riding the “royalty roller coaster,” a term that would outlive his short premiership and later be used by former premier Rachel Notley and current Premier Danielle Smith.
Despite big talk and varying levels of recognition that this needs to change by governments of all stripes - United Conservative, Progressive Conservative, and New Democratic - it’s easier said than done, which is why it isn’t going to change anytime soon. Because as anyone who has read through twenty years of budget speeches will know, even when economic times in Alberta are great, economic times are still tough.
Nate Horner’s confused conservative budget
So we have this year’s budget, tabled yesterday by the United Conservative Party government’s Minister of Finance Nate Horner, the scion of a genuine political family that included provincial finance ministers and deputy premiers and federal senators and cabinet ministers.
Despite his impressive political lineage, this budget falls flat.
“Budget 2025 is a budget of tough but measured choices that meet the needs of Albertans and maintains our Alberta advantage,” Horner said. “It cuts taxes, steadfastly supports public services and solidifies our economic foundation so it can withstand future headwinds.”
That doesn’t really tell us much, does it?
Horner put on a brave face when he spoke about the government’s fiscal challenges in a pre-budget video posted on social media, but his robotic delivery gave the impression he isn’t exactly enthusiastic about this budget. That’s probably because Horner’s budget includes $1.5 billion in tax cuts and a $5.2 billion deficit, which reflects the clever observation by the University of Calgary’s that Albertans are tax averse but not fiscally conservative.
Albertans want well-funded public services but don’t want to pay taxes for them. We want a never ending oil boom.
It might be to Horner’s chagrin, but there really isn’t anything fiscally conservative or very responsible about this budget. And despite Horner having to stand up and table it in the Legislature, it’s been clear for months that this budget was being drawn up in Premier Smith’s office.
The message the UCP government is trying to send with this budget is confused and contradictory, but it will probably not offend too many Albertans. It may be irresponsible but it also might be very forgettable.
Smith gets her tax cut
Just two months ago Smith said uncertain economic conditions meant that Albertans would have to wait until 2026 and 2027 to see the tax cut she promised in the last election. But low and behold, the tax cut is now included in this budget, even though we are now living in undoubtably even more uncertain economic times today.
A cynic might say that Smith’s promise to include the new tax bracket of 8% on the first $60,000 of personal income was pushed forward to distract from the erupting Dodgy Contracts Scandal that led to Minister of Infrastructure Peter Guthrie resigning from cabinet (he was replaced yesterday by West Yellowhead MLA Martin Long). Others have said Smith and her handpicked Productivity Review Cabinet Committee have spent months trying to find a way to shoehorn the tax cut into this budget.
The tax cut will be welcomed by some, as tax cuts always are, and it will be celebrated among Smith’s base, but in light of the pressures facing our public services and American President Donald Trump’s threats of tariffs and economic wrath on Canada, it feels a little tone deaf.
Budget doesn’t rise to the occasion
Alberta is experiencing a huge population boom with pressure continuing to increase on hospitals and schools and the staff that make them work. Budgets are made through a series of choices, and the $1.5 billion of revenue the UCP is giving up with this tax cut feels like a missed opportunity.
The health care and education budgets received modest funding increases, but it’s not what is needed to fix the space crunch and staffing shortage being felt everyday by patients and students.
Instead of the UCP giving up $1.5 billion in revenue, why not put some those funds to good use by increasing the pay of education support workers on strike in Calgary, Edmonton, Fort McMurray, Morinville, Redwater, St. Albert and other communities across the province?
Thousands of those striking education support workers rallied very loudly outside the Legislature as Horner’s delivered his budget speech on the floor of the Assembly. They are some of the lowest paid workers in the education system and to some students they are also the most essential.
The UCP government admitted the education supporter workers are valuable and much needed when Minister of Education Demetrios Nicolaides ordered students with complex needs to stay home during the strike, a decision that was recently overturned by a judge, but they still can’t bring themselves to give the workers an offer they will accept.
Who said what: Reactions to the budget
NDP Opposition Finance critic Court Ellingson:
“Albertans want good jobs and help with the increasing cost of living. They also want investments in public health care, public education, and public safety. But with billions in cuts, the UCP’s budget fails to meet the needs of Albertans.
While this government guts public health care and public education, they’re spending more of Albertans’ money on CorruptCare. Albertans deserve a budget that makes their lives better. This budget doesn’t even attempt to do that.
The budget fails on jobs. With unemployment rates climbing, it has no plan for creating new jobs or addressing the devastating U.S. tariffs that will wreak havoc on our industries and communities.”
City of Edmonton Mayor Amarjeet Sohi:
“This budget is a step in the right direction, but we still have a long way to go to achieve full equitable treatment for Edmonton. I look forward to continuing to work collaboratively with the Province and Premier Smith to ensure Edmontonians are well supported.
I will continue to advocate for fairness for Edmontonians as we receive more details about the provincial budget over the coming weeks.”
Alberta Teachers’ Association President Jason Schilling:
“Budget 2025 fails to meet the funding required to address the needs we have repeatedly outlined as plaguing Alberta’s public education system. Instead of a desperately needed $11.35 billion investment in the future of Alberta, this government has shortchanged Alberta’s students by $910 million (8 per cent).
Alberta’s public schools deserve better. Less than $10 per student per school day would have begun to address the unmet needs in our classrooms.
Even more unacceptable is the increased funding of private schools. Public dollars belong in public classrooms.”
Business Council of Alberta President Adam Legge:
“This moment in Alberta challenges our public policy to both plan for uncertainty and focus on what can be controlled – two things every farmer in this province has done for generations. In that spirit, today the Government of Alberta brought a measured budget for the times: taking a prudent approach and preparing for multiple scenarios in an unpredictable economic climate.”
Friends of Medicare executive director Chris Gallaway:
“Albertans are worried about accessing the health care they need when they need it. Heading into Budget 2025, we were watching for key investments in public health care including prioritizing action on health care capacity and workforce planning for a growing province. Unfortunately for Albertans, that’s not what we saw in today’s budget.
Instead, Budget 2025 continues to roll out the government’s expensive and chaotic restructuring of public health care in Alberta, while doubling-down on their failing privatization schemes. Neither of which have delivered on promised improvements to access to health care for Albertans.”
Alberta Union of Provincial Employees Vice-President Sandra Azocar:
“Budget 2025 and the government’s three-year fiscal plan is a blueprint to starve health care, education, and public service workers into submission.
Is the government moving money around to help hard-working Albertans, or are they manufacturing a deficit so that the government can cry poor at the bargaining table?”
AUPE members are prepared to fight for what we deserve – on the picket line if necessary.”
International Union of Operating Engineers Local 955 Business Manager Chris Flett:
“IUOE 955 is incredibly pleased to see the Alberta government deliver this significant and historic support for union training providers in Budget 2025.
This is the first provincial government to ever invest in union training, making it crystal clear it is serious about expanding apprenticeship availability to all Albertans.
This funding will help ensure the next generation of skilled trades professionals is ready to meet the growing demands of industry, and we’re thankful to Minister Rajan Sawhney and the entire government for their ongoing encouragement and confidence in union skilled trades training.”
Alberta Municipalities:
Alberta Municipalities appreciates that Local Government Fiscal Framework (LGFF) Capital funding increased by $96 million in accordance with the agreed-upon formula. Unfortunately, that increase was offset by unexpected decreases in other infrastructure programs for municipalities. We will continue to advocate that the overall funding envelope needs to be increased. Alberta’s multibillion dollar infrastructure gap is growing, thanks to rapid population growth and increased wear and tear on municipal infrastructure like roads, bridges, and wastewater treatment plants.
Montreal Economic Institute director of research Krystle Wittevrongel:
“The current trade uncertainties between Canada and the United States are not a government sector crisis, but a private sector crisis, and the Smith government rightly recognizes that. By lowering Albertan’s tax bills, it is providing much needed relief for consumers and workers who risk bearing the brunt of both countries’ tariff hikes.”
“The government rightly recognizes that Albertans need relief, but now it needs to do the hard work of right-sizing its expenditures. With a number of collective bargaining agreements up for renewal, it will have to hold the line on massive new spending or risk seeing these deficits become chronic.”
CUPE Alberta President Rory Gill:
“The government has increased education funding, but it’s not enough to cover enrollment and inflation. We would need an increase of 6.8%, what we got was 4.5%. So Alberta’s education will continue to deteriorate.
For four years, Alberta has had the lowest education spending in Canada.
This means the strikes are likely to continue and spread to more school districts. The government does not seem to care that education support workers are making poverty wages, and have gone a decade without a proper increase.”
Calgary Chamber of Commerce President & CEO Deborah Yedlin:
“We remain unsure of the magnitude, timing and targets of the tariffs – all of which put the government in a difficult position from a budgeting perspective. Simply, there are too many undefined variables. That said, the budget does focus on addressing some areas within our control, including investing in key initiatives to strengthen our economy while preparing for a rocky road ahead.”
“Yet businesses – particularly small businesses – still face mounting challenges. More support is needed to help them navigate rising costs, expand workforce training opportunities, adopt technology and remove barriers to interprovincial trade so Alberta can remain a leader in business and innovation.”
President of Beer Canada CJ Hélie:
"Today's announcement is an encouraging first step toward implementing a more balanced and transparent beer fiscal framework for Canadian brewers operating or selling in Alberta.”
