Saskatchewan’s deficit has grown by $13.6 million to $595 million since the province’s mid-year financial update.
The silver-lining for the province is this new deficit projection is still better than the $696 million deficit originally projected for the fiscal year.
This is being attributed to a $168.9 million drop in revenue for the province. That blow was softened by a $155.3 million drop in expenses.
“While we are seeing progress, there is more to accomplish,” Finance Minister Donna Harpauer said.
“Our economy is performing well and is expected to post positive growth for the first time in two years. We will meet our fiscal challenges by controlling spending and ensuring we do what we can to help keep our economy strong.
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“We continue to listen to Saskatchewan people. While staying on course we made adjustments in-year, including fulfilling Premier Moe’s commitment to exempt PST on premiums for agriculture, life and health insurance, and restoring needed funding to K-12 education and the College of Medicine.”
5 per cent executive government cut
The Moe government has worked quickly to fulfill campaign promises. Included is a retroactive cut to PST on health, life and agriculture insurance. This is expected to cost $65 million in the 2017/18 fiscal year and $100 million in the 2018/19 fiscal.
To cover this, the province plans on reducing the workforce government agencies, ministries and Crown corporations by five per cent.
“We’re going to be always looking for efficiencies within government. We’ve done that in the past to look for efficiencies,” Harpauer said.
She added the goal is to achieve this reduction through attrition. There are around 25,000 people working in these branches of government. A five per cent cut means 1,250 fewer jobs.
“These are services the people of Saskatchewan rely on. Our Crowns are doing ok, they’re actually putting money into the coffers right now, and this is where they’re looking to cut. It doesn’t make sense,” finance critic Cathy Sproule said.
Harpauer is confident about the status of the three-year plan to return to balance. University of Regina associate economics professor Jason Childs does not see obvious future cuts.
“I mean, we’re running a relatively lean civil service at the moment compared to other jurisdictions, so deep cuts run the really big risk of cutting into muscle and bone, and not just fat,” Childs said.
More information on Saskatchewan’s fiscal future will be revealed when the provincial budget is delivered on April 10.
Revenue
The bulk of the revenue decline comes from a $309.3 million shortfall in projected tax revenue.
Individual income and corporate tax revenue are both expected to be down by over $100 million respectively.
The province said this is due to weakness in 2016 tax assessments.
Tobacco tax revenue is also down $20 million. Saskatchewan Liquor and Gaming Authority is expected to bring in $41 million fewer dollars, due to declining liquor sales and VLT use.
On the flip side, non-renewable resource revenue is expected to rise $37.4 million from the mid-year projections.
This is driven by a forecasted $42.1 million increase in oil and natural gas revenue.
Revenue from government owned business, such as the Worker’s Compensation Board (WCB) and Crown corporations, is expected to climb $92 million from the mid-year projection. The WCB is contributing the most to the provincial coffers at $86.5 million due to higher returns on investments and lower claims costs.
Expenses
Despite a dry year expenses in the Agriculture Ministry are down significantly, a projected $164.2 million.
The Ministry of Health saw the biggest expense increase at $66.1 million. The province says this is due to increased use of Saskatchewan Health Authority services.
Debt for the province also continues to shrink. The latest forecast is public debt forecast is down $448 million, primarily due to declining debt in the Crowns and WCB. Debt payments for the province also dropped $9 million, due to lower than expected interest rates on long term debt. Total public debt for the province is projected to be $17.7 billion at the end of the fiscal year.
More to come…