Alberta’s first-quarter fiscal update now expects that the provincial government’s operating deficit this year will be $10.9 billion, up from the previous $10.4 billion estimate from the budget in April.

This will negatively affect the province’s net financial position, which is simply the total of the province’s debt minus the value of its financial assets. As of last year, Alberta’s financial assets exceeded its debt, meaning it was in a net financial asset position.

However the erosion in the province’s net financial position this year will be larger than the expected $10.9 billion operating deficit. This is due to how the provincial government budgets for capital spending.

The $10.9 billion figure only accounts for the deficit in its operating budget, which covers operating expenses such as the salaries of government employees. When the government borrows to pay for capital expenditures such as roads and hospitals, it comes out of the capital budget, so the spending doesn’t show up in the widely reported deficit figures. The most recent five-year capital plan entails $34 billion of spending over five years. That means capital spending can materially influence how the province’s financial position changes in a given year.

So how bad does this year look for Alberta’s net financial position, once we factor capital spending into the equation?

The erosion in Alberta’s net financial position in 2016/17 is expected to be roughly $14.5 billion—about a third larger than the $10.9 billion operating deficit. Clearly, the widely publicized deficit figure does not provide a complete picture of how badly Alberta’s net financial position is eroding.

With the $14.5 billion erosion in its net financial position, Alberta expects to find itself in a net debt position of $10.6 billion at the end of this fiscal year, meaning its debt will exceed its financial assets. It will mark the first time the province has been in a net debt position since 2000/01. This represents a $45.6 billion change of fortune for a government that held $35 billion in net financial assets as recently as 2007/08.

As Alberta crosses into a net debt position, it’s important for Albertans to recognize that the erosion in its net financial position is even faster than it appears if one only considers the widely reported operating budget deficit. Capital spending is also expected to contribute significantly to the projected run-up in provincial net debt that’s set to occur in the years ahead, so this deserves close attention.