A projected $3 billion deficit means there will be no new money for negotiations with the province's teachers and doctors, Finance Minister Doug Horner said after releasing the province's first quarter results on Thursday.

"I think there should be message in this for them in the sense that we are going to hold the line on our spending," Horner said at a news conference in Edmonton. "We are tightening our belts.We would expect all others to do the same."

The province is currently heading towards a deficit in the range of $2.3 billion to $3 billion. Decreased royalties from oil and bitumen, as well as lower Crown land sales, are blamed for a $400 million drop in revenue.

Disaster funding accounted for a $5 million increase in expenses.

"Certainly, this is a first-quarter deficit that's higher than what we anticipated at budget time, but it's important to remember that much of the fiscal year is still ahead of us," Horner said.

Government departments have been directed to review their capital projects and keep their spending below budget. The new Royal Alberta Museum will not be affected, Horner said.

The fiscal update comes one day after the province cancelled plans to build a police and peace officer college in Fort McLeod. Horner claims the decision wasn't an exercise in cost-cutting, but was based, instead, on a re-evaluation of need.

Budget slammed as pre-election deception

The Redford government came under criticism in February when Horner tabled a budget that projected an $886 million dollar deficit for the 2012-13 fiscal year.

Opposition members said the province used an economic outlook that was far too positive and a crude oil price that was way too high.

Wildrose MLA Kerry Towle said Thursday's numbers shows how the government didn't listen when her party sounded the alarm.

"The bubble has officially burst on the Alison in Wonderland budget," Towle said, referring to the premier.

"This government's inflated budget projections are now exposed for exactly what they were — a pre-election scheme to deceive Albertans and hide the true extent of their fiscal incompetence and mismanagement."

Towle also accused the government of withholding numbers about the deficit that are usually included in fiscal updates.

Talks underway with doctors and teachers

The province is currently in talks with the Alberta Medical Association on a new deal to replace the master agreement that expired in March 2011.

In a written statement, AMA President Dr. Linda Slocombe said the province had not informed her organization of "any implications for our discussions."

Slocombe said that despite rising costs, doctors have not seen any fee adjustments since 2010.

"Costs for physicians to run a practice and care for patients have continued to rise, for example staff costs, leases, equipment, supplies, property taxes, etc.," she said.

"These are economic pressures that affect physicians and our ability to ensure access for patients — and these things need to be addressed."

The Alberta Teachers Association declined to comment on salary negotiations, but said cutting back on school construction is not the answer.

“Their predictions are 100,000 new students in the next decade, said ATA president Carol Henderson. "We’re not anywhere near prepared for all those new students.

"We already have classrooms with 45 students in them. And the classrooms are built for 25."

Highway 63 twinning will stay on track

At least two transportation projects will escape the belt tightening, said Alberta Transportation spokesman Parker Hogan.

The northeast leg of Anthony Henday, started in March 2011 will not be affected, he said.

Highway 63, the main route between Edmonton and oilsands north of Fort McMurray, will also escape scrutiiny.

"The premier has made a very definitive commitment," Hogan said. "The minister of transportation has also made that commitment, that Highway 63 is a priority. Highway 63 will continue to be built, to be twinned."