Sask. forecast deficit down $296M since provincial budget; revenue and expenses rise
REGINA -- Saskatchewan’s projected deficit for 2020-21 is down $296 million since the provincial budget was revealed in June, according to the province's latest fiscal update.
The province is now projecting a $2.1 billion deficit for the fiscal year, down from $2.4 billion in the provincial budget.
“Saskatchewan’s fiscal foundation is solid and our province’s economy continues to re-open and recover from the effects of the global pandemic,” said Donna Harpauer, Saskatchewan's finance minister, during a press conference on Thursday.
“We are also aware certain sectors and industry continue to face significant challenges,” she said.
Forecasts for revenue and expense have both increased.
The deficit decrease is fueled by a projected increase in revenue for the year. The government is forecasting revenue of $14.05 billion, up $398 million, or 2.9 per cent, from the budget.
The province attributes the increase largely due to $338 million in federal funding, as part of the federal-provincial Safe Restart Agreement.
A forecast of a $56 million increase in resource revenue also contributed to the rise.
The province is also predicting an additional $103 million in spending this year. Expense is projected to be roughly $16.2 billion, including the 0.6 per cent increase since the budget.
The budget update forecasts a $72 million increase for the health system, a $70 million increase for municipalities and a $35 million increase for new supports for tourism.
The province budgeted a $200 million health and public safety contingency. Since June, the government spent $40 million on resources for Saskatchewan schools. The contingency now sits at $160 million.
NO TAX INCREASES, CUTS PROJECTED
Harpauer said the province isn’t projecting any tax increases.
As well, she said she doesn’t foresee cuts, but expects there will be austerity.
“We fully recognize we’re going to have an austerity budget, but that doesn’t mean cutting. It means minding spending,” she said.
“Can we have any large grandiose announcements probably for the next couple of years? I’m going to say not, unless it’s going to stimulate further growth into the future.”
Harpauer said she believes the people of Saskatchewan would like to see the province spend within its means and eventually get to a balanced budget.
THE NEXT FOUR YEARS
The government said its medium-term outlook projects progressively smaller deficits in the next three years with a $125 million surplus forecasted for 2024-25.
The province said expense growth is targeted at 1.5 per cent each year. It does not expect revenue to return to pre-pandemic levels until 2022-23.
Deficits of $1.4 billion in 2021-22, $855 million in 2022-23 and $340 million in 2023-24 are forecasted.
Public debt is projected to decrease by $455 million. The province primarily attributes this decrease to the improvement in the deficit forecast and lower government business enterprise debt.
The province is projecting a rise in public debt by $33.6 billion by 2024-25, based on the need for infrastructure.
The province said the economy is projected to contract 5.5 per cent in 2020, up from a 6.3 per cent decline in the budget. Saskatchewan’s real GDP is forecast to grow by 4.6 per cent in 2021.
ERRING ON THE SIDE OF CAUTION
Harpauer said hindsight is always 20/20, but believes the province made the right choice in being cautious when dealing with the pandemic.
She said the province was facing uncertainty and wasn’t sure what COVID-19 was capable of. It meant the province had to build capacity in case the virus spread catastrophically, she said.
“There will be a lot of reflecting back in our country of what should have been done or what could have been done differently, but we made the best decision at that time and erred on the side of caution. We were not alone on that,” she said.
Harpauer suggested Saskatchewan’s budget isn’t heavily reliant on resource revenue, noting it makes up 10 per cent of the budget.
Reporters questioned if the projected price of oil of nearly $60 a barrel by 2024 was too high, but officials said the forecast is based on estimates from the private sector and sales data from Saskatchewan producers.
SASK. NDP REACTS TO FISCAL UPDATE
The Saskatchewan NDP say the province’s latest fiscal update is grossly inadequate.
Finance critic Trent Wotherspoon said he suspects the Sask. Party government will run deep cuts and sell Crown corporations after presenting what he says are rosy numbers.
“These numbers should have been presented as a part of the budget, and because they weren’t, we are not able to demand answers about the Sask. Party’s plans for austerity,” Wotherspoon said.
The NDP also urged to have the province’s books looked at by an independent provincial auditor. This would provide the public with a full picture before the next election, he said.
He called on the government to re-call the legislature in order for more oversight on the province’s finances.
He said if the NDP is elected, it would provide more transparency on government finances.