A hiring freeze and spending cuts have been implemented as the Saskatchewan government tries to deal with a mounting deficit.

The mid-year budget update released by Finance Minister Kevin Doherty on Tuesday shows a $400-million drop in revenue has pushed the deficit to $1 billion. The deficit figure includes a $236 million Workers' Compensation Board earnings distribution to employers.

Doherty says low oil and potash prices are having a greater impact on revenue than expected. Non-renewable resource revenue is down $180 million and potash revenue has dropped by $141 million.

“It has now been two full years since the oil price started to drop in the fall of 2014, and we are seeing a much greater effect on corporate and personal income tax and the Provincial Sales Tax,” Doherty said in a news release.

“To start moving the provincial budget back to balance, significant restraint measures are needed. Measures will be implemented now, with more to follow in next year’s budget.”

In addition to cutting spending by $217 million across government, a public sector hiring freeze has been implemented. Only positions considered essential will be filled.

The government says it’s committed to holding the line on labour costs across all sectors of the public service.

“Public sector salary expense across government is now about $6.3 billion a year, so if we are going to control government spending, we have to control labour costs” Doherty said.

The mid-year forecast shows revenue from corporate and personal income tax is down $81 million and $172 million, respectively. Revenue from provincial sales tax has declined by $128 million, while the fuel tax pumped $20 million less into provincial coffers compared to budget estimates.

Overall spending is forecast to increase by $285 million. The government says higher crop insurance claims and cost pressures in health and social services will be offset somewhat by restraint measures.

“Saskatchewan’s economy is more diversified than ever before,” Doherty said. “However, low commodity prices continue to be a challenge that we must meet with a strong financial plan and an eye to ensuring long-term strength.”

The budget released in June had a projected deficit of $434 million.