Alberta's finance minister, Nate Horner, is preparing to deliver the Budget 2025 on Thursday afternoon, aiming to balance immediate cost-of-living concerns for Albertans with the need to balance the province’s books amid looming economic uncertainty. Given the threat of U.S. tariffs, which are set to take effect early next month, constructing this budget promises to be more complex and challenging than usual.
"It’s always challenging to build a budget in Alberta," Horner remarked inside the legislature on Wednesday. “This year’s no exception. It’s going to be more challenging with the threat of tariffs and the uncertainty we see." This uncertainty spirals largely from the tariffs threatened by U.S. President Donald Trump, who has indicated all imports from Canada could face tariffs, with specific rates set at 25 percent for most products and 10 percent for oil and gas.
Horner mentioned the budget will include multiple scenarios, planning for the potential fallout from the anticipated tariffs. "It’s just showing Albertans we’re going to leave some dry powder, hopefully for government to be flexible and respond, and also have a plausible scenario for what may come," he stated. He added the province had to almost start from scratch on some revenue assumptions, particularly since the uncertainties began surfacing around the third week of January.
With the oil prices dropping below projections and Alberta experiencing rapid population growth, the fiscal pressures are intensifying. This population growth, which has surged by 4 percent over the last two years, has certainly bolstered tax revenues but has similarly put significant strain on public services, raising the stakes for this budget.
The provincial fiscal framework allows for running a deficit if revenue declines by $1 billion or more, which Horner indicated is possible if tariffs on Canadian goods come to fruition. The potential economic repercussions extend beyond statistics; Albertans are preparing for the real impact on jobs and affordability. Horner emphasized the importance of addressing these concerns by working within the restraints of the budget, aware of its significance for residents and businesses alike.
"That’s part of the challenge," he explained. "We’re very cognizant of what it could mean for Albertans and their businesses." This awareness has been echoed by various sectors, particularly agriculture and forestry, which heavily depend on exports to the United States. The shadow of tariffs is particularly worrying as they constitute significant revenue streams for these industries.
Opposition finance critic Court Ellingson expressed concerns about how proposed tax cuts could affect lower-income earners. He argued, "That tax cut is not going to give the benefits to low-income earners than people might think. It is not really delivering big benefits to low-income Albertans." Ellingson is apprehensive these tax cuts would come at the expense of funding for programs aimed at aiding those most vulnerable—an outcome he predicts based on upcoming budget decisions.
Continuing his argument, Ellingson asserted the need for strong public services and fiscal responsibility, especially against the backdrop of tariff threats. "We need to be thinking about delivering really strong public services and keeping this province stable and resilient in the face of tariffs," he advised, pointing to the necessity for Alberta to diversify its markets. "How are we helping those companies explore new markets, expand their businesses to create jobs for Albertans?" he questioned.
Adding to the conversation, Charles St. Arnaud, chief economist at Alberta Central, weighed in on the potential fallout from tariffs. He conjectured Alberta would be dramatically impacted due to its heavy reliance on exports to the U.S., noting, "We might have lower tariffs on our major exports, especially energy, but most of our exports are directly geared toward the U.S. ". St. Arnaud highlighted the possibility of losing between 20,000 to 35,000 jobs over the next two years if the tariffs are enacted.
He also pointed out the precarious nature of Alberta's fiscal outlook, which heavily relies on fluctuational oil prices and lacks diversification. "The price of oil always has an oversized impact on Alberta's fiscal outlook due to its reliance on resource revenues and the lack of provincial sales tax," St. Arnaud advised, bringing focus back to the pressing issues affecting the overall economy.
Reflecting on the apprehension surrounding the economic forecast, Horner summarized, "There are so many things out of our control." This sentiment is echoed within the treasury as officials deliberate on how best to structure financial forecasts amid tumultuous external economic pressures. With the budget looming, Albertans are left to wonder how effective the government can be at ameliorizing the challenges posed by tariffs without sacrificing necessary public services.
The impending budget is set against the backdrop of rising costs and the need for fiscal prudence. While there are hopes for tax cuts to alleviate financial stress for those struggling, the question remains whether those benefits will be swallowed by cuts to public services and supports for low-income residents. The coming days will reveal how Alberta navigates its budgetary challenges and responds to the growing uncertainties presented by potential U.S. tariffs on Canadian goods.