Alberta’s New Democrats confirmed on Wednesday that the recession that began in the energy-producing province in 2015 will now extend into 2016, the first time since the early 1980s oil slump that Alberta’s economy will shrink for two consecutive years.

With North American oil prices languishing around $30 (U.S.) per barrel, lower energy royalties and reduced tax revenue is expected to increase the province’s deficit from $6.1-billion to $6.3-billion for the fiscal year ending on March 31. The announcement was contained in a third-quarter update released on Wednesday that captured the state of the province’s finances over the last three months of 2015 as oil prices were in freefall.

“This is a once-in-a-generation economic challenge. As such, we are committed more than ever to prudent fiscal management,” Finance Minister Joe Ceci wrote in a statement.

Alberta’s deficit, the largest in two decades, would have been larger had it not been for a $250-million federal grant and a demand for $145-million in aid for crop damages that never materialized after a summer of record drought.

Alberta’s economy is now expected to contract by 1.1 per cent in 2016, following a decline of 1.5 per cent in 2015. The government’s forecast is now more pessimistic than that put out by ATB Financial, a provincially-owned financial institution. ATB Chief Economist Todd Hirsch had said in January that he expected the provincial economy to contract by only 0.5 per cent in 2016.

While Alberta’s economy went into decline in 2015 due to rapid decline in oil prices, years of fast population growth had created a need for continued spending outside of the oil and gas sector. An example of that is the provincial government’s plan to spend big on infrastructure over the rest of this decade, totalling $34-billion on new schools, hospitals and roads. However, beyond public spending, the “momentum that supported activity in the province in 2015 has faded,” the report says.

As a result, the unemployment rate is expected to average 7.4 per cent in 2016—the highest rate since 1996—and investment in the oil and gas sector is expected to decline by a further 20 per cent in 2016, following a steep decline in 2015.

The Alberta government now expects 6,000 more people will move out of the province in 2016 than decide to settle there from elsewhere in Canada—the first domestic outflow since 2010.

Premier Rachel Notley’s decision to end the province’s 10 per cent flat tax on incomes and introduce higher rates for Albertans making more than $125,000 has added an extra $440-million to the $11.2-billion the province expects to collect in personal income taxes.

The province’s recession has helped one budget line: revenues from liquor taxes are up by $3-million as Albertans buy more alcohol.

The Alberta legislature will resume sitting on March 8 and adjourn on March 17 for a two-week recess. Mr. Ceci has yet to announce when the NDP government’s second budget will be introduced.