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Alberta Premier Alison Redford.John Lehmann/The Globe and Mail

Alberta Premier Alison Redford is backing away from her pledge to balance the books, saying she won't delay spending as revenues sink because of lower-than-expected oil prices.

Instead, Ms. Redford and her ministers have this fall begun using a different term: "operational balance." They say provincial revenues will cover everything – except billions in infrastructure spending, which the province will pay for by taking on debt. Fast-growing Alberta can't afford to not build schools and roads, Ms. Redford said.

"For us, it's about reality. The reality is the economic downturn has gone in a way that no one expected it to," the Premier said Thursday, after a speech in which she said Alberta's worst deficit would be one of infrastructure. By repaying infrastructure debt over time, she said, "we will pay less in the long run, socially and financially."

Alberta's outlook comes after the federal government this week projected larger deficits and pushed back its target date for a balanced budget, with both governments blaming lower energy prices.

Debt-free Alberta is running its fifth consecutive deficit budget, despite low unemployment and a relatively strong price for oil, which closed at $85.31 Thursday. Until now, deficits have been covered by the province's rainy day Sustainability Fund, and Alberta expected a surplus by next year. Using debt to pay for infrastructure marks a change of tune in a province where former premier Ralph Klein held back on spending to balance the books – a legacy Ms. Redford suggested she's cleaning up after.

"We had an awful lot of catching up to do. And we're not going to fall behind again," she said.

Experts say any budget must include infrastructure to be considered balanced. "The province needs to be honest to Albertans and businesses about that," said Ben Brunnen, chief economist with the Calgary Chamber of Commerce. Borrowing for individual capital projects, like a school, is actually sound policy, Mr. Brunnen said, but deficits aren't. The province needs a new fiscal framework that limits spending growth, forecasts infrastructure spending and saves surpluses, he said.

Mr. Klein's legacy poses problems for Ms. Redford's plan, said Duane Bratt, chair of the department of policy studies at Calgary's Mount Royal University. "In any other jurisdiction, this is not news. But Alberta is different, and Alberta is different because of Ralph Klein. He made this a mantra," he said.

Opposition Leader Danielle Smith said the government is mismanaging its money. "Ralph Klein was able to balance the budget when oil was $30," the Wildrose Leader said. "If there is one jurisdiction on the planet that should be able to balance its books, it should be Alberta."

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