CALGARY -- An Alberta arbitration board ruled Friday that public service workers and general support workers will only see a one per cent raise on their pay cheques this year, while auxiliary nurses won't see any raise at all.

Alberta's Finance Minister Travis Toews suggested the move was in the best interest of the province to address the "overspending problem" by the previous government.

"These increases – while much less than the 6.5 per cent to nearly eight per cent increases the Alberta Union of Provincial Employees was seeking – will mean an additional $35 million annual expenditure for public sector compensation. As indicated in the last budget, there is no new money for public sector raises over the course of our fiscal plan," he said in a release.

Toews added the government will now need to seek other ways to balance the budget to cover the increased cost and it could mean layoffs.

"These unfortunately include the potential for adjustments to workforce levels, as well as finding efficiencies in program service delivery," he said.

With rounds of negotiations coming up this month, AUPE President Guy Smith told CTV News unions are gearing up for a fight.

"It's going to be challenging, but that's our goal: to get (a) negotiated agreement that all our members support and respects the hard work our members do every day," he said.

"Knowing that's going to be challenging, we are preparing them for them to take strike action if we're unable to resolve it at the bargaining table."

Christina Gray, the Alberta NDP's labour critic, called Toews' statement "insulting."

"Premier Jason Kenney and the UCP are handing out $4.7 billion to profitable corporations in a failed experiment that hasn’t created a single job. Now, they're making threats about firing those still lucky enough to find themselves with a paycheque under this current government."

Toews, in his statement, insisted the government is still supporting the public sector despite the UCP's fiscal plan.

"The need for restraint does not diminish our recognition of the hard work they do for Albertans, but government is expected to be responsible stewards of the public’s tax dollars and get our province’s finances under control."

The ruling also rejected a separate wage increase for some correctional peace officers.

With files from CTV News Edmonton