Alberta striving to ‘meet the challenge’ in Budget 2025

“Now, and throughout our history, resiliency and optimism have been in our DNA and are two reasons why we always overcome our challenges.” These were some of the words Finance Minister Nate Horner shared as he tabled his second budget, Meeting the Challenge, amid the uncertainty of shifting geopolitical dynamics and the threat of U.S. tariffs. 

Unlike its predecessor, Budget 2025 pushes Alberta into the red. Typically fiscal hawks, Horner and his cabinet colleagues found themselves confronted with the threat of tariffs and revenue shortfalls, while also seeking to deliver an expensive tax cut to honour their campaign commitment. In his speech, Horner acknowledged the province’s uncertainty, noting that Alberta is “being buffeted by forces that exceed our ability to influence or predict.” Facing these challenges, Premier Danielle Smith’s budget chief was tasked with crafting a fiscal plan that minimized the deficit as much as possible given the financial situation, while prioritizing essential services for Albertans and keeping their political promises. 

Here’s what you need to know:

By the numbers

$79.3 billion in total spending – up $4.4 billion since Budget 2024 

$5.2 billion deficit, with deficits also projected the next two fiscal years 

$1.2 billion to implement the tax cut  

$28 billion in operating funding for the healthcare system, up 5.4% since Budget 2024 

$26.1 billion over 3 years in the 2025 Capital Plan – an increase of 4% 

8.7% estimated debt-to-GDP ratio.

Highlights

Tax Cut: The headliner fulfills a 2023 campaign commitment to introduce a new 8% tax bracket for all income up to $60,000 per year. The tax cut is expected to save Albertans up to $750 annually but will come at a cost of about $1.2 billion this year. 

Healthcare: Healthcare is the biggest winner in Budget 2025, with $1.4 billion in new spending amid ongoing healthcare system transformations. The operating budget funding includes $4.6 billion for acute care, $1.7 billion for addiction and mental health services, $3.8 billion for Assisted Living Alberta, the province’s new continuing care agency, and $644 million for primary care to improve access to family doctors and primary healthcare professionals. Additionally, $45 million has been allocated for Indigenous health initiatives over the next three years, and $7 billion for physician compensation and development. 

Education: K-12 education is the other big winner, receiving $9.9 billion in operating funding, a 4.5% increase from last year’s third-quarter forecast. This includes $54 million to support enrollment growth, $1.6 billion for students with specialized learning needs, and $55 million to add staff and other resources to complex classrooms. Additionally, $1.1 billion has been allocated over the next three years to hire 4,000 additional teachers and classroom support staff. 

Capital: Alberta’s Capital Plan received a $1.1 billion boost, with $26.1 billion allocated over the next three years. The plan includes $2.6 billion for K-12 educational infrastructure, $1.1 billion for housing and social supports, $2.5 billion for road and bridge infrastructure, and $3.6 billion for healthcare infrastructure. Additionally, $7.5 billion has been set aside to support municipal infrastructure, and $25 million has been allocated for police equipment and border patrol facilities as part of the province’s border security initiative. 

Economic Outlook: With the threat of U.S. tariffs looming and economic uncertainty ahead (the province projects a 10% tariff on energy and an average 15% tariff on goods), economic growth is expected to decline to 1.8% in 2025 and 1.7% in 2026, down from 3% in 2024. West Texas Intermediate (WTI), a key oil benchmark influencing Alberta’s government projections, is forecast to be $68.00 per barrel in 2025–26. The province also anticipates producing 519,000 barrels of conventional crude per day. Additionally, population growth is expected to slow to 2.5% in 2025, down from 4.4% in 2024.

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