A significant dip in resource revenue, a decline in corporate and personal income tax, as well as anticipated crop insurance payouts are just some of the factors contributing to Saskatchewan’s $600 million drop in projected revenue.
Finance Minister Kevin Doherty is preparing his mid-year update, which will give a concrete look at provinces finances. The projected deficit in June was $434 million and now that figure is approaching the $1 billion mark.
“We can’t afford to spend more given our revenue situation. So this government’s going to make some difficult decisions in this fiscal year and ensuing fiscal years to get us back to a sustainable level,” Doherty said.
READ MORE: Revenue drop means Saskatchewan deficit creeps closer to $1B: finance minister
As the government works on the 2017/18 budget, Doherty said all options are on the table. This includes borrowing more money.
The government recently received approval to borrow up to $6 billion dollars. The previous ceiling was $3 billion.
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“When you’ve had a drop of $1.2 billion in resource revenue over the last 18 months, you can’t just shutdown hospitals or shutdown schools or cut off the kind of funds you need to provide for the critical services here in the province when you’re that short on revenue,” Doherty said.
Across the aisle, NDP finance critic Cathy Sproule raised concerns about potential borrowing, as the province’s operating debt currently is $4.1 billion, according to the last budget.
“What worries me is what the credit rating agencies are going to say about this. We see a premier who brags about reducing the deficit, but every year we see more borrowing,” she said.
Tax increases are also on the table.
Jason Childs, an associate economics professor at the University of Regina said the Saskatchewan Party government likely won’t table a large increase due to ideological reasons.
However, he said there are other tax changes they could use in an effort to boost revenue.
“We might see a point or two on the provincial sales tax. We might see changes in personal income tax rates. We’re going to see some deductions disappear,” Childs explained.
“I’m almost certain of that.”
Childs believes spending cuts are a more likely route to a more sustainable budget. However, he added the government has a tough road ahead as the public will not likely tolerate a reduction of service in areas like health and education.
“There’s got to be a major shift in how services are delivered. We can’t use the existing models to deliver the same services with 10 or 15 per cent less money,” he said.
Doherty has until the end of the month to table his update, but has said he hopes to have it out next week.
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