Trump tariffs and tax cut have Alberta's finance minister seeing red (ink)

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.

Horner tabled a budget with $5.2 billion of red ink this year, and $1.2 billion of that is the cost of the reduced income tax rate the premier promised in the last election campaign.

He'd previously said Alberta couldn't afford to bring in the new eight per cent tax bracket until 2027. And after expressing concern that oil prices and other uncertainties threatened to tip Alberta into its first deficit since the height of the COVID pandemic, his budget brought in the rate cut anyhow.

When Smith told CBC News in December that she'd be OK with going into deficit to bring in her tax cut, she also said Horner had "robust conversations" with her on this question, and he tended to be the cautious sort of finance minister.

Horner made that reluctance clear when asked about it Thursday.

"If it wasn't for the position that we're in with the tariffs coming in — the uncertainty — I might have had to get drug [dragged] to this point if I was going to do this," Horner told reporters. "Balanced budgets mean a lot to me."

It would appear, based on that assertion, that Smith's own lobbying proved less persuasive than the high likelihood that U.S. President Donald Trump will impose punishing tariffs on Canada. A tax cut that could save individuals up to $750 a year, Horner now reasons, offers some affordability relief against the coming economic blow.

Historically, balanced budgets have meant a lot to Albertans, too, including former premier Ralph Klein's triumphant erasure of the provincial debt two decades ago, and Jason Kenney's return to surpluses after the oil-price slump and recession the NDP government oversaw.

But these days, Horner isn't sure he's governing over a province of anti-deficit hawks. The minister says he tells provincial counterparts: "I don't know how fiscally conservative Albertans are, but they're definitely tax averse."

Smith's first budgets as premier hiked spending more in two years than Rachel Notley's NDP did over four, and 2025's edition raises spending in many areas, largely to keep up with the rapid growth that will push Alberta's population past five million this year.

She and Horner appear to have judged that the populace doesn't want the sort of Klein-era cuts that chased away unbalanced budgets. Rather, Albertans may want a little extra something for themselves if the government is adding to taxpayer debt instead of curbing it.

"Conservatives, we don't like deficits. We're allergic to them," conservative strategist Sarah Biggs told the West of Centre podcast this week.

"But if the deficit is caused because of a tax cut to the middle class, I think they will be OK."

Will the big question marks around Trump tariffs add to the public's deficit tolerance?