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Alberta Premier Rachel Notley speaks about her Fort McMurray wildfire experience during an interview in Edmonton on May 30, 2016.Jason Franson/The Canadian Press

Alberta's deficit topped $6.4-billion last year, the largest shortfall in decades and $324-million worse than expected when Premier Rachel Notley's government tabled its first budget in October.

The deepest provincial deficit in Canada is being blamed on a worsening economy and low oil prices: Most of the drop in government revenue came from a sharp decline in energy royalties, which fell by nearly 70 per cent, or $6.1-billion, in the past fiscal year.

The final deficit number was contained in the province's 2015-16 annual report, released Wednesday. The report covers a difficult time for Alberta when oil prices tumbled from more than $100 (U.S.) a barrel to just more than $30.

Alberta's economy contracted by 3.7 per cent in 2015 and the price of a barrel of oil averaged $45.

Finance Minister Joe Ceci pledged to stick with the plan put forward by Ms. Notley's New Democrats to avoid austerity and increase infrastructure spending in an attempt to restart the provincial economy.

"Albertans expect a steady hand, not knee-jerk cuts. You don't answer an economic challenge by making it worse," he said.

Mr. Ceci has also pledged to balance the government's books by 2024 – a time frame that would theoretically stretch into Ms. Notley's third term.

While oil and gas prices have remained relatively stable this year, albeit at a level where many of the province's energy producers struggle to be profitable, unemployment has topped 7 per cent and Wednesday's figures show the economy is still in the doldrums.

The Alberta government expects to post some of the largest deficits in the province's history before the end of the decade.

The shortfall for 2016 is expected to top $10.4-billion, a figure that will only increase due to the still-rising cost of the Fort McMurray fire.

Royal Bank of Canada expects the province's economy will contract by a further 2.5 per cent in 2016 before returning to growth in 2017.

The S&P bond rating agency has downgraded Alberta's credit twice over the past year, from a pristine AAA rating to an AA; the downgrades increase borrowing costs for the province.

Despite increases to personal and corporate income taxes last year, the government collected $1.3-billion less than it expected in revenue – a sign of an economic slowdown that has affected everything from vehicle registrations and land titles to cigarette sales.

A $250-million stabilization grant from the federal government to help Alberta with its worsening fiscal situation did little to plug the hole in revenue.

Instead, expenses were $1-billion less than expected as the government reduced costs and cancelled some programs, including a marquee job-creation plan that was shelved in late 2015.

The opposition was quick to link the worse-than-expected deficit to the government's economic performance.

"What a difference a year makes. The first full year of NDP government has taken a $1.1-billion surplus from the previous fiscal year and delivered a $6.4-billion deficit," said Ric McIver, the interim leader of Alberta's Progressive Conservatives. "It's just the tip of the iceberg."

At the end of the fiscal year, on March 31, 2016, the government had only $3.6-billion left in its rainy-day account. When that account runs dry, expected this year, Alberta will begin taking on debt to finance the day-to-day operations of government for the first time since the 1990s.