Saskatchewan’s budget remains on track while emptying contingency fund
Saskatchewan’s 2017-18 budget remains on track according to the province as they released their mid-year financial report on Wednesday.
“Saskatchewan’s economy is performing well and is expected to post positive growth for the first time in two years,” Finance Minister Donna Harpauer said.
“The budget contingency is more than enough to offset unrealized compensation savings in 2017-18, as well as a modest $44 million net decline in government operations.”
At mid-year, the 2017-18 budget deficit projection is $679 million, $6 million less than the budget estimate of $685 million.
Revenue is projected to be down $53 million from the budget, reflecting reductions in tax and resource revenue, largely offset by increases in other revenue sources.
A portion of this tax revue decline comes from delays in the implementation of PST increases on agriculture and construction insurance contracts. Many agriculture contracts were signed in the spring, but PST changes were not introduced to August. All existing contracts were not impacted by these changes. It’s estimated this cost the province $24 million in revenue in agriculture, and $90-$95 million on existing construction contracts.
Expenses are projectd to be $9 million less than the budget estimate, with a large reduction in extended crop insurance claims offset by utilization-driven spending increases for medical services, income assistance, child and family services, forest fire-fighting costs, and higher construction custody counts.
“Compensation savings projected at budget are not likely to be achieved in 2017-18,” Harpauer said.
“This, combined with the lower revenue projection, fully uses the $300 million planned contingency established when the 2017-18 budget was announced.
“While it is taking longer than we would have liked, our government has asked employers to continue to pursue compensation savings, as part of continuing to manage our expenses very carefully as we pursue our plan to balance the budget by 2019-20.”
When asked how these savings will be achieved, Harpauer said the government is considering several different avenues.
“That can be accomplished in a number of ways. It can be managing attrition, it can be through wage freezes, which is being proposed in our neighbouring Alberta, hiring freezes are also being contemplated in NDP Alberta,” Harpauer said.
The finance minister added that lay-offs are seen as a last resort.
NDP finance critic Cathy Sproule said the need to use the contingency to cover the 3.5 per cent wage reduction was predictable when the budget came down.
“I think that $300 million contingency was a bit of a shell game to begin with. If they honestly expected that $250 million wage cuts backs to be realized in this fiscal year that just shows that they’re not in touch with reality,” Sproule said.
Harpauer said the province’s finances and economy remain on track with budget expectations and real GDP is forecast to grow by 1.5 per cent in 2017 and 2.2 per cent in 2018, fueled by a strong performance in the resource sector.
Public debt is forecast to be reduced by $323 million this fiscal year. Harpauer said this is primarily due to the deferral of capital projects in the Crown corporations. Saskatchewan is expected to finish the year with a public debt load of $17.87 billion dollars.
She added that a return to normal crop production next year, along with rising oil prices and strong investments in the oilfield, is expected to support stronger growth in 2018.
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