Alberta is forecasting it will end the next fiscal year with a $5.2 billion deficit but that could soar to $8.7 billion under a worst-case tariff scenario outlined in Thursday’s provincial budget.

Canada's oil-producing province of Alberta on Thursday forecast a budget deficit of C$5.2 billion ($3.5 billion) for the 2025/26 fiscal year if U.S. tariffs are implemented and decrease government revenues and slow economic growth.

Province's new budget means nearly all Albertans will pay less in income taxes, while home and business owners — especially those in Calgary — will pay more in provincial property taxes. The province also expects to take in more money from several other new taxes and fees.

The province is projecting a $5.2-billion deficit, but is offering income tax cuts that will pull more than $1-billion from provincial coffers

Alberta is bracing for a trade war with the United States that, when coupled with sagging energy prices, will usher in years of deficits, according to the provincial budget tabled Thursday, adding to the growing list of provinces preparing for economic turmoil that would accompany tariffs on Canadian goods.

In a rare admission, Finance Minister Nate Horner acknowledged there was some political daylight between him and Premier Danielle Smith when it came to putting Alberta deeper into deficit for the sake of fast-tracking a tax cut.

Alberta’s finances, tied for generations to the steep peaks and sharp valleys of oil and gas prices, are once again plunging deep into deficit, with no immediate relief in sight.

Alberta’s books are set to turn red, according to Thursday’s budget, as the province readies to reckon with three-straight years of projected fiscal shortfalls brought on by tariff-based uncertainty,