The Alberta government says its financial situation is worse than forecast. Treasury Board President Doug Horner says unless things change, the provincial government is looking at lower energy royalties than budgeted in the first quarter of the year. If that happens, government departments have been put on notice that they may have to reduce operational spending and look at whether capital spending plans can be deferred or even cancelled, in order to keep from going back into deficit. However, he says there's no need to panic, and that the government will hit its projected targets. Horner says the first quarterly report comes next month.