The Government of Alberta released its 2016/17 Annual Report last week. The official deficit for that fiscal year totalled roughly $10.8 billion, bringing the province into a net debt position for the first time in nearly 20 years. The Alberta government’s total debts now exceed its financial assets.

Despite the bad news, Finance Minister Joe Ceci still maintains the budget will be balanced by 2023/24. However, Albertans should view this claim with some skepticism.

As of the March budget, the province is still expected to have a $7.2 billion deficit in 2019/20 (the last year for which estimates are provided). Importantly, that deficit estimate is premised on a number of assumptions about spending and revenues in the future. For instance, it assumes the price per barrel of oil will reach $68—which is far from certain.

If the projections for oil prices do not materialize, that means less revenue and potentially even more debt. For every dollar the average barrel of West Texas Intermediate (WTI) oil falls short of the budget estimate each year, the provincial government is expected to collect $310 million less in revenue. At the moment, the price per barrel is roughly $8 below the estimate for 2017/18, meaning the projected $10.3 billion deficit for 2017/18 could end up being much higher.

A more fundamental problem, however, is that Finance Minister Ceci has yet to acknowledge the source of Alberta’s current fiscal problems—more than a decade of rapid spending growth during the commodity boom. In fact, his government has repeated the past mistakes of Progressive Conservatives governments by increasing spending by 11 per cent in their first two years in office.

And spending, which is already at unaffordable levels, continues to rise in the years ahead.

Reducing and reforming spending will be key to any credible deficit elimination plan. If the provincial government fails to rein-in deficit spending, it will quickly add to its growing pile of net debt for the foreseeable future.

Now would be a prudent time for the finance minister to unveil a credible plan to bring spending in line with revenue, rather than allowing the province’s fiscal health to further deteriorate.