The Alberta government has revised downward the price of oil used to forecast this year's budget revenues from $55 to $49 US a barrel due to lower prices since the start of the fiscal year.

The government still anticipates Alberta will have a $10.5 billion deficit at the end of the fiscal year. The debt is expected to hit $43.3 billion instead of the $45.1 billion figure projected in the March budget.

According to the province's first-quarter update released Wednesday, the $6 drop means the government will rely on half of a $500-million risk adjustment fund built into the 2017-18 budget to cushion for possible fluctuations in oil prices.

The price of West Texas Intermediate oil has averaged $47.90 since April 1, the start of the fiscal year. The 2017-18 budget, released on March 16, forecast revenues based on an average $55 oil price.

Revenue is now expected to drop by $648 million compared to the budget forecast, due to a drop in personal income tax ($312 million) and a drop in resource revenue ($377 million).

But expenses are expected to be $357 million lower. The government plans to look for another $200 million in savings, in addition to $200 million in already planned cuts.

Finance Minister Joe Ceci said work is underway now to find those savings. He said he is confident ministries could find things to cut but he was unable to provide specific examples beyond reductions in travel and a hiring freeze.

Finding savings 'takes time'

"It's something that takes time and effort to work at shaving, downsizing, consolidating and being more efficient," he said. "You just can't do that with the stroke of a pen. You need to do that in a thoughtful way."

United Conservative Party finance critic Ric McIver criticized Ceci for not disclosing more detailed information on reductions.

"It's fine for the minister to stand here today with no details whatsoever and say we're going to cut $400 million," he said. "But the more difficult part of the conversation is where will the minster cut it, and then suddenly, the cat's got his tongue."

The government is spending $398 million less on capital projects, mainly due to schools that won't be ready to start construction this year.

The fiscal update has some good economic news. Employment is expected to jump by 1.3 per cent this year, instead of the 0.9-per-cent increase forecast in the budget

The unemployment rate has been adjusted to 7.8 per cent, instead of eight per cent.

Housing starts are expected to climb, mostly due to the quicker pace of post-wildfire reconstruction in Fort McMurray.

The government says the province had 34,500 additional jobs since the low point of July 2016. About 17,000 have been added for 2017.

The first quarter covers the period from April 1 to June 30.​