Province releases first-quarter update

Province releases first-quarter update
Is the controversial provincial budget on track to reduce the deficit? That's been the $684 million question hanging over the finance minister in the lead up to the first quarter update. Our David Baxter dives into the numbers.

Finance Minister Kevin Doherty said the province is on track with to meet goal outlined in the provincial budget when he delivered the first quarter update Friday.

Both projected revenue and expense saw multi-million dollar increases; $42 million on the revenue side and $81.9 million for expenses.

The deficit forecast remains unchanged from March: $684.7 million dollars. Total revenue is expected to be $14.2 billion, while the province anticipates spending $14.88 billion.

Doherty acknowledged a major factor in keeping the budget on track is the province’s $300 million contingency fund.

The province is still in the process of negotiating the bulk of the planned 3.5 per cent wage cut with their various employer and employee groups. This budget measure was originally planned to save $250 million. That has been cut in half, and is now down to $125 million, as negotiations continue.

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In order to make up the difference, the province is dipping into the contingency fund, which now has $135 million for the remainder of the fiscal year.

“We built the contingency in precisely for those reasons,” Doherty said.

“We’ve seen in years past where I’ve come out and done the midyear update were we’ve had to adjust things considerably because those unforeseen circumstances have come up and now we have to adjust our budget.”

Opposition Leader Nicole Sarauer doesn’t see it that way.

“It’s pretty ridiculous to say that we’re on track; they used up half their contingency fund in the first quarter alone. You don’t have to be an accountant to realize that’s not on track,” she said.

Economics professor Jason Childs at the University of Regina has a more charitable view of the plan to balance the budget by 2020.

“It’s within range. I’m not sure I’d say on track exactly, but we’re not completely off the rails,” he said.

The question of whether or not the 3.5 per cent compensation reduction will have to be answered at the bargaining table. However, there are some adjustments the finance ministry has made.

READ MORE: Sask. government restores library funding

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Oil was originally projected at $56.25/barrel in the 2017/18 budget. That projection has been lowered to $49.75/barrel. While better than expected, potash prices soften the blow. The drop in oil contributes to a $35.6 million projected shortfall in resource revenue.

A $40 million increase in tax revenue and increased federal transfer money contribute to the overall rise in resource projections.

Agriculture, health, and social services are the main contributing factors in the $81.9 million expenditure increase.

A $36.5 million increase in projected health spending is attributed to increased use of services.

The additional $40.7 million in agriculture is largely attributed to crop insurance, with more acres being insured this year.

Social Services is expected to spend an extra $22.9 million due to increases for Child and Family Services and Disability Services.

The austerity budget delivered in March was – by Premier Brad Wall’s own admission – unpopular with voters because of cuts that were made to help tackle a $1.3-billion deficit from last year.

READ MORE: Moose Jaw, Sask. reeling from provincial budget

The deficit was due in large part to the ongoing impact of low resource prices.

The Saskatchewan Party government took a number of measures in the most recent budget to fight the deficit. They included increasing and expanding the provincial sales tax and shutting down the Crown owned Saskatchewan Transportation Co.

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The government also slashed funding to libraries, community-based organizations and to funeral services for people on social assistance, although it has backtracked on those plans.

Leadership aspirations

The Saskatchewan Party membership is still months away from choosing a successor to Premier Brad Wall. Doherty has said he is seriously considering a campaign for the leadership position.

Last week he said he wanted to get the Q1 update out before making a decision, and now he has some serious thinking to do over the weekend.

“I’m still consulting with some folks. I’m not trying to be coy here, I literally have not made a decision yet. So I’ll hopefully come to that decision by Monday,” Doherty said.

Cabinet ministers, like Doherty, have until Monday August 28 to declare their intentions.

With files from The Canadian Press