Prentice says a full discussion must be held with Albertans to find a way to deal with a decline of $7 billion in resource revenues triggered by a fall in world oil prices to below US$50 a barrel.
"I know there is a thought out there that we should just ride this out and prices will rebound and we'll be back into happier times," Prentice said Thursday.
"That is not the advice we are receiving."
Prentice noted that both financial and energy experts have made it clear prices aren't going to recover any time soon.
He said it's expected a barrel of oil could be selling for US$62 next year and maybe US$68 the year after that.
But he added it isn't likely to move much beyond that for some time.
"This is a different market circumstance than we've seen in other commodity cycles. Prices are not going to bounce back."
Alberta has to look for other ways to make up the shortfall, including a change in taxation, Prentice said. He pointed to the province's 10 per cent flax tax, which he said has its positives, but is also "regressive" and a challenge to the "working poor."
"One of the negative things about it is that for the working poor it is one of the toughest forms of taxation in this country, because it has a flat level of tax for people who are struggling to raise their families and make ends meet," he said.
"I don't believe that was the original intention ... they did not intend that it would be regressive, to use that term, on poor people in this province. I think we need to be mindful of that, especially as we go forward in what is going to be a difficult year."
In Edmonton on Thursday, NDP Leader Rachel Notley, said the New Democrats have been fighting against the flat tax for a long time.
"Welcome to the party," she said. "We've only been saying that for about 15 years. I'm not quite sure why it took them so long to get that.
"If they had gotten it 15 years earlier, we wouldn't be in this position now."
The NDP and the Liberals have long argued for a progressive income tax, saying a flat tax punishes working families.
"It has long since been a tax that only benefits millionaires in Alberta," said Notley.
"The flat tax has to go."
She said the flat tax has been part of a punitive economic blueprint crafted by the PCs.
"When times are bad, regular Albertans are told to pay the price. When times are good, they're not invited to the party.
"And that's the way it's been for the last 20 years."
— With files from Dean Bennett in Edmonton
Follow @BillGraveland on Twitter
ALSO ON HUFFPOST: