Saskatchewan has released its year-end financial results on Friday and they finished 2015-16 with a $675 million deficit.
The province is blaming the deficit on declining resource revenues such as oil and potash, which is down $853 million from 2014-15 and down $692 million from the 2015-16 budget forecast.
“Saskatchewan lost nearly one-third of our resource revenues compared to the previous year,” said Finance Minster Kevin Doherty.
“In spite of this huge drop, we are managing through this challenging period. We will continue to work toward returning the province to balance in 2017-18.”
The 2015-16 deficit, minus the pension adjustment, is $248 million higher than the $427 million projected during the third quarter. In the fourth quarter the resource sector continued to struggle and taxation revenue was lower than expected. Also the province didn’t receive federal assistance for wildfire costs in 2015-16 as expected.
READ MORE: Saskatchewan budget tanks on oil prices; deficit up to $427 million
The $675 million deficit, when combined with the 2015-16 pension adjustment of $842 million, results in a $1.52 billion deficit.
The pension adjustment is a highly volatile and for that reason the province said they do not include it in surplus or deficit calculations at budget time or for the province’s quarterly budget forecast.
“As we explained at budget time, the pension adjustment fluctuates by hundreds of millions of dollars from year to year,” Doherty said.
“It is effectively an accounting adjustment which represents how much it would cost the government if it had to pay out all pension costs owing immediately. Of course, these pensions are not paid out all at once – they are paid out over a long time period, so it wouldn’t make sense to make budget decisions based on an accounting adjustment that fluctuates so much from one year to the next.”
Total revenue in 2015-16 was $13.63 billion, $792 million less than projected at budget time. Oil revenue was about $345.7 million less than budgeted and down nearly $724 million compared to 2014-15. Potash revenue was $552.1 million, about $244 million less than budgeted.
“Returning the province to balance by 2017-18 will not be easy,” Doherty said. “It will require transformational change and a close look at everything government delivers. These results and the volatility of the non-renewable resource sector only serve to further our resolve to change and make the difficult decisions that will lead to greater sustainability.”