Budget 2025: What It Means for Public Servants

The Bottom Line

Budget 2025 puts you in a holding pattern. The government has doubled the contingency to $4 billion, explicitly to address compensation expense from collective bargaining currently underway across government, health, education, and post-secondary sectors. However, the government is also committed to keeping operating expense growth below population growth plus inflation, meaning departments are absorbing cost pressures with limited new base funding. Your take-home pay gets an immediate boost from the new 8% income tax bracket, saving you up to $750 per year, regardless of how collective bargaining concludes.

Top Measures That Affect You

1. Collective Bargaining: $4 Billion Contingency Partly for Your Contract

The contingency has been increased to $4 billion in 2025-26, up from $2 billion in 2024-25. The Fiscal Plan states this increase is specifically to "address unforeseen implications of increased economic uncertainty as well as compensation expense for collective bargaining currently underway." The various compensation agreements being negotiated will have significant expense impacts across government departments, large provincial agencies such as health entities, school boards, and post-secondary institutions. Outcomes are not yet known, but money has been set aside.

2. Operating Expense Growth Constrained

Total operating expense grows to $64,311 million in 2025-26, a 3.6% increase. The government's legislated fiscal framework requires that operating expense growth remain below population growth plus inflation. Operating expense growth remains under this ceiling in Budget 2025. For you, this means your department is unlikely to receive significant base budget increases beyond what is needed for existing commitments. The operating expense is projected to grow by an average of 1.7% per year to $66.5 billion by 2027-28.

3. Personal Income Tax Cut: Up to $750

The new 8% income tax bracket on your first $60,000 of income saves you up to $750 per year, effective January 1, 2025. If you earn less than $60,000, your personal income taxes fall by approximately 20%. You should see this reflected in your paycheques after July 1, 2025, when payroll withholdings are adjusted. This is a concrete, immediate benefit that does not depend on collective bargaining outcomes.

4. Health System Restructuring Affects Health Workers

The health care system is being reorganized into four integrated provincial health agencies: Recovery Alberta, Primary Care Alberta, Acute Care Alberta, and Assisted Living Alberta. Health operating expense is $22,096 million in 2025-26. If you work in the health sector, your reporting structures and organizational alignment may change. The Fiscal Plan includes $451 million for physician compensation increases and $513 million for Alberta Health Services pressures from higher volume and inflation in 2024-25.

5. Education Sector Growing

Education operating expense is $9,883 million and Advanced Education is $6,635 million in 2025-26. Education expense increased $205 million from the prior budget, primarily due to enrolment growth and an accrual for potential implications of collective bargaining on 2024-25 compensation. If you work in K-12 or post-secondary, your sector is receiving growth funding driven by enrolment pressures.

6. Full-Time Equivalent Positions

The budget shows departmental FTE counts. The government's approach is to manage staffing within existing budgets while accommodating growth in demand-driven areas like health and education. School boards show certificated staff at 39,927 (up 1,045 from the prior year) and non-certificated staff at 28,660 (up 560).

7. Deficit Context for Negotiations

The province is running a $5.2 billion deficit in 2025-26, with two more deficit years projected at $2.4 billion and $2.0 billion. This fiscal context shapes the government's negotiating position on compensation. The Fiscal Plan emphasizes that deficits are permitted under the fiscal framework when revenue drops by more than $1 billion from the prior year, but the province must return to balance within three years.

Direct Financial Impact

Immediate tax savings: The 8% bracket on your first $60,000 of income saves you up to $750. This is a guaranteed benefit regardless of your collective agreement outcome.

Compensation outlook: The $4 billion contingency is the government's fiscal room for compensation settlements plus other unforeseen costs (disasters, emerging priorities). Not all of this is earmarked for wages. The final amount available for compensation depends on what other pressures emerge during the year.

Wage enhancements for specific roles: The budget specifically funds wage enhancements for Personal Support Workers in continuing care. If you work in this area, you may see targeted wage increases through your collective agreement.

Pension provisions: Pension provisions are budgeted at negative $375 million in 2025-26, meaning prior over-contributions are being drawn down. Your pension benefits remain as defined in your plan.

No layoff signals, but constrained growth: The budget does not signal large-scale workforce reductions, but the operating expense ceiling means limited room for new positions outside of demand-driven sectors.

Service Changes

Four new health agencies: If you work in health, your employer structure is changing. Acute Care Alberta and Primary Care Alberta report to Health; Recovery Alberta to Mental Health and Addiction; and Assisted Living Alberta to Seniors, Community and Social Services. Budget numbers have been restated to reflect these changes.

Program review continues: The budget continues the government's commitment to program review and reallocation, enabling funding to be redirected to priority areas. Some programs see reductions to fund increases elsewhere.

Mental Health and Addiction: This ministry receives $1,663 million in operating expense, with Recovery Alberta as a new agency. If you work in addictions treatment or mental health services, your organizational home is changing.

Technology investments: Technology and Innovation receives $834 million in operating expense and $698 million in capital over three years, supporting digital government initiatives that may change how you work.

What's Missing

No across-the-board wage increase announced: Budget 2025 does not pre-announce a specific wage increase for any public sector group. The outcomes depend entirely on collective bargaining, with the $4 billion contingency as the fiscal backstop.

No remote work policy direction: The budget does not address hybrid or remote work arrangements for the public service.

No public sector workforce strategy: Despite significant restructuring in health, there is no announced comprehensive workforce strategy for recruitment, retention, and succession planning across the broader public sector.

No inflation catch-up: With CPI at 2.6% and several years of high inflation preceding this budget, there is no announcement of a one-time inflation catch-up adjustment outside of what may emerge from collective bargaining.

No professional development funding increase: The budget does not specifically increase training or professional development budgets for public servants.

Key Dates

Date	Event
January 1, 2025	New 8% personal income tax bracket takes effect
February 27, 2025	Budget 2025 tabled
April 1, 2025	2025-26 fiscal year begins
After July 1, 2025	Adjusted payroll withholdings reflect tax cut on paycheques
2025-26	Collective bargaining outcomes expected during fiscal year
2025-26	Health system reorganization into four new agencies
2026	Alberta Disability Assistance Program launches
2027-28	Government targets return to balanced budget

Where to Get Help

• Your union representative: For updates on collective bargaining progress and what the contingency means for your contract.
• Alberta Treasury Board and Finance: For details on the income tax cut and overall fiscal plan. Visit alberta.ca/budget.
• Alberta Union of Provincial Employees (AUPE): For government of Alberta employees.
• United Nurses of Alberta (UNA): For registered nurses and allied health professionals.
• Alberta Teachers' Association (ATA): For teachers in the K-12 system.
• Health Sciences Association of Alberta (HSAA): For health science professionals.
• Your departmental HR: For information on how health system restructuring affects your specific position.