The budget cuts made by the Saskatchewan government appear to be having the intended impact of bringing down the deficit.
In its mid-year financial report released on Wednesday, the province said the projected deficit has been reduced to $679 million, which is $6 million less than what was forecasted at budget time.
The austerity measures in the budget have made a difference by curbing spending by $9 million.
The biggest reduction came from crop insurance claims, however, spending increases were driven by need including the costs of fighting wildfires, medical services, income assistance, child and family services and higher counts of people in custody for provincial corrections.
Provincial revenues have also decreased by $53 million due to a drop in tax and resource revenues. The government stated this will be offset by increases in other revenue sources.
It is unlikely the government will meet its hope of reducing provincial public sector costs by 3.5 per cent.
“We are not even remotely close in savings which is why I am acknowledging we might not get any of it,” Finance Minister Donna Harpauer said in a news conference.
Which is why Harpauer confirms all of the $300 million contingency fund that was laid out in the budget has been spent. That means it will be difficult for government to handle any unforeseen financial issues that may arise between now at the end of the fiscal year in March.
“There’s always risk in every budget that we have had, but you have a better handle on it in the second half of the year,” Harpauer insisted. “I hope we don’t have to make any changes to this budget.”
Overall, the economy is forecast to grow this year and the next year. The provincial government points to rising oil prices and oilfield investment to support the prediction of stronger economic growth in 2018.
The NDP remains unimpressed with the government’s handling of the finances.
Finance critic Cathy Sproule says the only reason government is on track is because it was cushioned by the contingency fund.
“In March they said that their operating deficit would remain the same but they are using the contingency fund to do that,” Sproule argued.