"We are actually warned by economists that to try to deal with this too quickly could actually trip the province into a recession and make matters worse," Prentice told reporters Friday in a conference call from Houston.
"So there may, to some extent, be a need to operate at deficits which are acceptable."
Prentice has previously promised financially conservative budgets and deficit avoidance.
But as the price of oil has continued to fall below US$50 a barrel, he said earlier week that it's time to discuss tax reform and even a sales tax to recoup the billions of dollars siphoned out of the provincial treasury.
He has also said now is the time to remake Alberta's funding model, which is currently heavily reliant on volatile energy revenues to pay for day-to-day expenses.
Last week, the premier said Alberta expects to run a $500-million deficit this fiscal year and that long-term oil price projections predict Alberta will be in budget deficit until 2018.
He estimates revenues will drop by $11 billion over the next two fiscal years.
Prentice refused Friday to rule out slashing public-sector salaries to help right the financial ship.
"We're all in this together," said Prentice.
"There needs to be burden sharing in terms of how we achieve expenditure reductions and revenue increases. And it needs to start with the employees of the Alberta government, and we've begun those discussions."
Prentice has said public-sector workers, including teachers, doctors, and nurses, are on average the best paid in the country.
Earlier this week, union leaders said inflation and a booming economy have put public-sector salaries in Alberta five per cent higher compared with the rest of Canada. But in the private sector, they argue, wages are 25 per cent higher.
They have promised to fight any job cuts or salary rollbacks.
"Here we go again," Gil McGowan, president of the Alberta Federation of Labour, posted to Twitter on Friday.
Prentice dismissed a reporter's suggestion that his Progressive Conservatives are responsible for the problem by failing to wean Alberta off oil revenues and putting more cash into savings when oil prices were high.
"I've been the premier of Alberta for approximately 120 days," he said. "I wasn't in the Alberta government before and I've inherited the circumstances that we're in and I intend to deal with it."
He also sent his clearest signal to date that he will call a spring election.
"I intend to make sure that the public supports what I'm doing and I intend to make sure that I have clear mandate from the people to do this," he said.
His party has already announced it is fast-tracking candidate nominations for the 87 ridings, with 35 to be in place by Feb. 21.
It also appears his team will go to the hustings with a fat wallet. On Friday, party president Terri Beaupre announced on the party's website that it collected $1.4 million in donations in the last quarter.
The amount reaches $1.6 million if contributions to local constituency associations are added in.
"It was our best quarter ever," wrote Beaupre.
The legislature resumes sitting on March 10.
By law, the election can't be called until the spring of 2016, however the legislation allows the lieutenant-governor to call it earlier if the government makes a case for it.
The Tories have 72 seats, compared with five for the Wildrose party, five for the Liberals and four for the NDP. Joe Anglin is the lone Independent.
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