(Adds detail and comment from third paragraph on)
CALGARY, Alberta, Jan 13 (Reuters) - The Canadian province of Alberta, the largest exporter of oil to the United States, is expecting a C$500 million ($418 million) budget deficit in the current fiscal year as falling oil prices cut into its revenue, the province's premier said on Tuesday.
Jim Prentice, the former investment banker and federal cabinet minister who took over as Alberta's premier in September, said the shortfall is likely to be covered by a C$5 billion provincial contingency fund and that he did not expect to incur debt because of the deficit.
Dropping oil prices, down by more than half since June, have bit into the revenue of the Alberta government, which relies on payments and royalties from the oil and gas sector to fund nearly a third of its budget. Just a few months ago Alberta expected to be in surplus for the fiscal year ended March 31.
"The speed with which this has all changed is something Albertans need to be mindful of," Prentice said at a press conference. "As recently as September ... the projection was that the province would have approximately a C$1.5 billion surplus."
Prentice took issue with a study from the Conference Board of Canada that forecast Alberta would slip into recession this year.
"I didn't find their analysis to be particularly cogent, to be frank," he said. "The opinion they put forward is an outlier amongst all of the other opinions put forward by every one of Canada's chartered banks and by other respected economic forecasters,"
$1=$1.19 Canadian Reporting by Scott Haggett; Editing by Peter Galloway