IMO this is what needs to be done.
Step 1. An act that requires all oil and gas royalties to go into the Heritage Fund, and 5% of the balance of the Heritage Fund gets put into general revenue. This turns royalty revenue into more of an annuity, to be grown for future generations and smooths the boom bust cycle of provincial revenues. It also makes the big hole in the budget even bigger.
Step 2. Introduce HST of 10% to plug most of the hole. HST isn't perfect, but it can be implemented quickly with essentially no cost to Albertans. The alternative is a PST that still isn't perfect and requires time and money to implement, along with additional bureaucracy. Even with a 10% HST, Alberta still had a tax advantage over pretty much the whole country.
Step 3. Now with more predictable future revenues, cut whatever needs to be cut to balance the budget.
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