(Bloomberg) -- Alberta is projecting a smaller budget surplus for the coming year as oil prices weaken and a rapidly growing population forces the province to spend more on education and health care.

Revenue will exceed expenses by about C$367 million ($270 million) in the fiscal year through March 2025, down from a projected C$5.2 billion surplus in the current year, the government estimated Thursday. 

Alberta’s budget projections show the challenges for a province that relies heavily on royalties from its oil and gas producers as immigration and Canadians seeking more affordable housing swell its population. Education, health care and capital spending are all slated to increase while non-renewable resource revenue is projected to decline.

Overall, revenue is forecast to drop 2.8% while expenses will grow 5.6%.

Read More: Soaring Canadian Housing Costs Drive Population Boom in Alberta

The budget is based on part on projections that US benchmark West Texas Intermediate crude will average $74 a barrel in the next fiscal year, down from an estimated $76.50 in the current period. The price of heavy Western Canadian Select crude is seen declining as well, though producers will benefit from a narrower discount to US oil as the start of the expanded Trans Mountain pipeline will give them more pricing power.

Even with the upcoming fiscal pressures, the province plans to inject C$2 billion into the Alberta Heritage Savings Trust Fund, which was created in 1976 to save some oil and gas revenue for leaner times when prices dropped or resources ran dry. That follows a C$753 million deposit into the fund in the current budget year, the first such addition since 2007.

Alberta was upgraded by S&P Global Ratings to AA- in December, one notch higher than Ontario, the largest Canadian province.  

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