Alberta and British Columbia Present Starkly Different Budget Approaches
The two westernmost provinces of Canada, Alberta and British Columbia, have recently unveiled their annual budgets, revealing a striking divergence in fiscal strategies despite both facing substantial deficits. In the past week and a half, these provinces presented financial plans that highlight contrasting economic conditions and policy responses.
Deficit Projections and Economic Context
British Columbia, grappling with slow growth, forecasts a deficit of $13.3 billion for the 2026/27 fiscal year, which represents 2.9 percent of its GDP. This marks an increase from the current year's deficit of $9.6 billion. In contrast, Alberta, benefiting from stronger economic growth, projects a deficit of $9.4 billion for the same period. This figure is more than double the $4.1 billion deficit anticipated for 2025/26 and stands as the largest since the pandemic era.
These developments signal a shift for provinces once regarded as models of fiscal discipline. They now join Ontario and Quebec in running significant deficits. However, British Columbia's net debt is projected to be 31 percent of GDP in 2026/27, which remains considerably lower than Ontario and Quebec, where net debt hovers around two-fifths of GDP.
Alberta's Fiscal Resilience and Debt Management
Alberta's debt burden is expected to reach 10.5 percent of GDP in 2026/27, maintaining a position well below other provinces. This relative stability is largely attributed to the province's robust oil revenues. Since the Ralph Klein government eliminated Alberta's debt by 2004, the province has generally adhered to frugal fiscal policies, although deficits have reappeared under subsequent Progressive Conservative and NDP administrations.
Alberta's approach stands in contrast to many resource-rich economies in the Middle East and Latin America, which have often squandered wealth on inefficient public spending. The province's finance minister cites various uncertainties, including trade friction with the United States, declining resource prices, and rising public-sector wage pressures due to post-pandemic inflation, as factors contributing to the current fiscal challenges.
British Columbia's Economic and Demographic Struggles
British Columbia's economy faces significant headwinds, primarily driven by population stagnation. The province's population, currently at 5.7 million, decreased by 14,000 in 2025 compared to the previous year, with further declines forecasted. Federal immigration policies have resulted in a net emigration of 16,000 residents to other parts of the world, according to Statistics Canada. This outflow has not been offset by natural population growth or inter-provincial migration.
In response, British Columbia has opted to increase spending and taxes, aiming to address economic pressures while managing its deficit. The finance minister points to similar uncertainties as Alberta, including trade issues and resource price drops, particularly in forestry products, as justifications for the fiscal approach.
Divergent Population Trends and Implications
The population dynamics between the two provinces are markedly different. Since January 2022, British Columbia's population has grown by eight percent, while Alberta's population, now exceeding five million, has surged by 12 percent. In the past year alone, Alberta welcomed over 40,000 international migrants and 24,000 individuals from other parts of Canada.
This population growth in Alberta brings increased demand for healthcare, education, and other public services, which the province must address even as oil and gas royalties and corporate tax revenues decline due to falling resource prices. Alberta's strategy focuses on managing growth through fiscal discipline, whereas British Columbia is hiking spending and taxes to cope with economic and demographic challenges.
The budgets underscore a fundamental divergence in how these provinces are navigating fiscal pressures, with Alberta leveraging its growth and resource advantages to maintain lower debt levels, while British Columbia confronts stagnation with increased fiscal interventions.
