EDMONTON - Alberta Premier Alison Redford is ruling out tax increases as her government grapples with plummeting energy revenues and another looming deficit.

Redford clarified her position on taxes Wednesday after a key member of her staff said the province was considering all its options, include tax hikes, as it prepares its upcoming budget.

"We know that this sudden drop in oil revenue has meant that we need to put all options on the table. It is part of what we are talking about as ministers," Redford said.

"Caucus and I are discussing it. My preference is clear. I don't want to see new taxes."

The premier, speaking at the Northern Alberta Institute of Technology, said Albertans faces difficult times and hard choices.

She said the cost of public sector salaries is growing and some Albertans support the idea of tax hikes.

But Redford said she stands by her commitment made during provincial election to hold the line on taxes.

"Tax revenue will not be increased in this budget," she said.

Alberta, which doesn't have a sales tax, is being squeezed by the low price of oilsands bitumen and a lack of pipeline capacity to export to the U.S. and other countries.

The deficit forecast for this fiscal year is between $2.3 billion and $3 billion.

Other than tobacco taxes, Albertans haven't faced a tax increase since 2002 when the government hiked medicare fees, which have since been eliminated.

A modest liquor tax increase in 2009 was cancelled after a few months.

The government actually lowered Alberta's flat income tax rate to 10 per cent in 2001. Most people in the province haven't faced an income tax increase in decades.

Jack Mintz, a University of Calgary public policy expert, said the Alberta government is boxing itself into a corner by eschewing taxes as a way of dealing with its financial problems.

He said natural gas and oil prices show no signs of recovering.

Mintz said without a sales tax or increasing other taxes and user fees the Redford government must either make big spending cuts or run larger deficits.

"I think the biggest mistake would be to hope for the best and just run large deficits and start piling up debt," Mintz said earlier this week in an interview.

"Albertans, if they are going to be honest with themselves, will see that they have a fiscal plan that is in shambles."

Mintz said there are no easy answers to the financial challenges the Redford government faces.

He said the decisions the government will make in its upcoming budget will have implications for years.

In November, Alberta Finance Minister Doug Horner reiterated the government will take on more debt to pay for schools, roads and other infrastructure to meet the demands of a province that is expected to grow to five million people in the next two decades.

Wildrose party finance critic Rob Anderson said Alberta has a spending problem, not a revenue problem, and called for cuts to expenditures.

Anderson said tax hikes shouldn't even be up for discussion around the cabinet table.

He said most people in the province wouldn't stand for it.

"I think Albertans are not in favour of it in any shape or form," he said from Airdrie.

Redford would not say when her government will present its upcoming budget.

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  • Here's a breakdown of how the Alberta government parceled out spending last year. Information provided is <a href="http://finance.alberta.ca/business/budget/2012-13-Expense-by-Function.pdf">Expense by Function estimates</a> provided by the Alberta government.

  • General Government

    7.1 per cent of the budget went to General Government - Includes a broad range of additional services including funding for parks and recreation, cultural activities, housing initiatives, economic development, costs to run government and debt servicing expenses (interest payments).

  • Environment

    1 per cent of the budget went to Environmental funding - Provides for environmental monitoring and protection, including pollution control, water supply management, air quality control, garbage collection and waste disposal and a host of other environmental programs and initiatives.

  • Regional Planning and Development

    2.7 per cent of the budget went to Regional Planning and Development - Includes amounts for planning and regional development and a portion of the grants made directly to municipalities, including the Municipal Sustainability Initiative.

  • Protections of Persons and Property

    3.9 per cent of the budget went to Protections of Persons and Property - Includes amounts for the protection of persons and property, including amounts for policing and security, the provincial court system, correctional and rehabilitation services, firefighting, labour relations and a host of other regulatory measures.

  • Transportation, Communications and Utilities

    4. 6 per cent of the budget went to Transportation, Communications and Utilities - Includes amounts related to road, rail and air transport and maintenance, public transit grants, as well as pipelines, utilities and telecommunications networks.

  • Agriculture, Resource Management and Economic Development

    5.4 per cent of the budget went to Agriculture, Resource Management and Economic Development - Includes amounts for farming support programs, food supply quality monitoring and protection, weed and pest control, crop insurance programs, natural resource management, economic and rural development, irrigation and veterinary care.

  • Social Services

    11.5 of the budget went to Social Services - Includes social assistance (e.g. AISH), pension benefits, and care for children, seniors and other vulnerable Albertans.

  • Education

    22.9 per cent of the budget went to Education - Includes Early Childhood Services to Grade 12, as well as post-secondary education, skills training and the construction and maintenance of educational facilities.

  • Health

    40.9 per cent of the budget went to Health - Consists of expenses incurred to ensure necessary health services are available to Albertans and includes funding for hospitals, medical and preventative care and the construction and maintenance of provincial health facilities.