UPDATE 2-Vote in Alberta referendum reopens debate over how Canada divvies up wealth among provinces

(Adds comment from Premier Kenney, details, background)

CALGARY, Alberta, Oct 26 (Reuters) - Voters in Canada’s main oil-producing province, Alberta, strongly backed removing a commitment to redistribute wealth among provinces from the Canadian Constitution, results from a nonbinding referendum showed on Tuesday.

The outcome gave Alberta’s United Conservative Party government and embattled Premier Jason Kenney a mandate to negotiate with other provinces about an equalization payments formula that is widely viewed as unfair in Alberta.

Official results showed 61.7% of voters supporting removing the principle of equalization from the constitution. Elections Alberta has not released voter turnout, but local media estimated it was around 39%.

The vote will not automatically halt equalization because the payments are embedded in the constitution and any changes need to be agreed upon with other provinces and territories.

Kenney said he would use negotiations over equalization to demand a repeal of “discriminatory” environmental laws that hurt Alberta’s energy sector, the linchpin of the provincial economy.

“What we are saying with these referendum results is we must have a fair deal. If Ottawa and fellow provinces want to benefit from the hard work and the resources of Albertans, then Ottawa must allow us to develop those resources,” Kenney told a news conference.

The referendum was a key part of Kenney’s “Fight Back” strategy, in which he promised to stand up for Alberta’s oil and gas sector.

Kenney has been criticized for his handling of the COVID-19 pandemic and has faced calls to resign from within his own party.

Equalization payments are enshrined in the constitution as a way of addressing fiscal disparities among the 10 provinces. The program transfers federal tax dollars collected from “donor” provinces like Alberta to those whose ability to raise revenues falls below the national average.

Alberta was an equalization recipient in the mid-1960s, but buoyed by energy revenues, has since been a donor and currently contributes about C$11 billion to C$12 billion a year.

Prime Minister Justin Trudeau said last week any amendment to the constitution requires significant consensus across the country and criticized the timing of the referendum, which came as Alberta is relying on federal help to tackle a fourth wave of COVID-19.

Trudeau, a Liberal, noted Kenney was part of the federal Conservative Cabinet that negotiated the current equalization formula over a decade ago.

“He himself contributed and approved of the current equalization formula that he’s now stirring up sentiment against a few years later,” Trudeau told reporters in Ottawa. (Reporting by Nia Williams; Additional reporting by David Ljunggren in Ottawa; Editing by Marguerita Choy and Peter Cooney)