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Strong Capital Plan, But Alberta’s Fiscal Foundation Needs Attention

Jordan Bateman : Updated on February 27, 2026

Blog Alberta Advocacy Updates

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KEY POINTS

Budget 2026 delivers a $28.3 billion three-year capital plan, $2.2 billion more than last year.
Workforce development investments, including $96 million for apprenticeship seats and $148 million for high-demand post-secondary programs, are welcome.
Housing starts are forecast to moderate to 35,000–40,000 units – but that’s a return to a strong historical norm, not a crisis.
However, the $9.4 billion deficit at just $60/barrel oil – with no plan to return to balance – raises serious questions about fiscal sustainability.

THE GOOD NEWS: CAPITAL PLAN

Budget 2026 makes important investments in Alberta’s infrastructure. The three-year, $28.3 billion capital plan is $2.2 billion more than Budget 2025, and it provides meaningful continuity for the work our members do every day: schools, healthcare facilities, transportation corridors, and municipal infrastructure – all essential to a province that has added hundreds of thousands of people in a few short years.

The numbers tell a constructive story for the industry:

"Budget 2026 delivers where it matters most for our members – the capital plan. Government construction spending on schools, hospitals, and infrastructure is going to be a critical stabilizer for this industry as private residential activity comes off last year’s historic peak. ICBA supports strategic infrastructure investment because modern, efficient public infrastructure underpins private sector growth, attracts capital, and creates jobs."

— Mike Martens, ICBA Alberta President

HOUSING: CONTEXT MATTERS

Housing starts are forecast to moderate from nearly 55,000 units in 2025 – an all-time high – to around 40,000 this year, settling near 35,000 over the medium term. That sounds like a steep decline, and it is from the peak. But context matters.

From 2016 to 2021, Alberta averaged roughly 25,000 housing starts per year (ICBA analysis). A return to the 35,000–40,000 range is a very good number for this province. It reflects a market normalizing after an exceptional boom driven by surging population growth – not a market in crisis. Government investments in affordable housing ($768 million), continuing care ($923 million), and lodge modernization ($150 million) will also help support construction activity through the transition.

WORKFORCE: INVESTING IN PEOPLE

The budget’s emphasis on skills development and training capacity is welcome. The $96 million Apprenticeship Learning Grant to expand classroom instruction seats and $148 million for new Targeted Enrolment Expansion initiatives in high-demand programs – including engineering, healthcare, and education – are the kinds of investments that pay long-term dividends. Alberta’s construction labour shortages haven’t disappeared; they’ve simply been overshadowed by the housing slowdown. When the cycle turns, we’ll need these workers.

THE BAD NEWS: THE FISCAL PICTURE

Alberta is projecting a $9.4 billion deficit for 2026-27, more than double this year’s $4.1 billion shortfall. There is no plan to return to balance. Four consecutive deficit budgets are forecast. Taxpayer-supported debt is expected to reach $109 billion by 2027, potentially climbing to $138 billion by 2029. Annual debt-servicing costs will rise from $2.9 billion to $4.9 billion – and every dollar spent servicing debt is a dollar that isn’t building infrastructure.

The government’s economic assumptions are reasonable. And that’s actually part of the concern.

"Here’s the thing nobody’s saying plainly enough: $60 a barrel oil isn’t a crisis price. It’s not even a particularly low price. WTI has traded well below $60 many times in recent memory, and some credible forecasters are projecting prices in the low-to-mid $50s. When you’re running a $9.4 billion deficit at moderate commodity prices, that’s not a cyclical blip – it’s structural. Every $1 drop in oil costs Alberta roughly $680 million in revenue. The government’s revenues are notably volatile, yet expenditures tend to be both stable and hard-wired to increase year after year. Absent a return to higher oil prices or meaningful spending adjustments, the existing fiscal structure is not sustainable."

— Jock Finlayson, ICBA Chief Economist

Sources: WTI at ~$60 (Globe & Mail) | EIA low-$50s forecast (Globe & Mail) | $680M per $1 drop (Global News)

Alberta continues to have the lowest net debt-to-GDP ratio among the provinces – and that fiscal advantage matters. But it’s eroding. Finance Minister Horner acknowledged this budget breaks the province’s own legislated fiscal rules – rules the UCP government created. The political consequences may be manageable. The fiscal signal is harder to dismiss.

"A strong construction sector depends on a fiscally stable province. Long-term infrastructure planning requires predictable public finances. When fiscal volatility spooks governments into pulling back capital spending – and we’ve seen that movie before in Alberta – it’s project pipelines, investment confidence, and workforce planning that take the hit. We’re not calling for cuts to critical infrastructure. We’re calling for a serious conversation about long-term fiscal sustainability, spending discipline, and ensuring value for every public dollar spent."

— Mike Martens, ICBA Alberta President

BOTTOM LINE

Budget 2026 gets the capital plan right. It gets workforce investment right. ICBA supports those commitments and will work with the government to ensure infrastructure dollars deliver maximum value for Alberta taxpayers and maximum opportunity for our members.

But the fiscal trajectory should concern every Albertan. The conversation about long-term sustainability – how Alberta funds its public services without lurching from surplus to deficit every time oil prices move – can’t wait until the next budget.

Watch icba.ca for more analysis from Jock, Mike, and the ICBA Alberta team in the days ahead.