Saskatchewan budget 2016-17 shows deficit of $434 million

It is no surprise Saskatchewan’s financial picture isn’t rosy.

The province is in deficit by $434 million, and while it insists it will get back to balance within two years, it will continue to spend more than it is taking in. The government is forecasting revenues of just over $14.02 billion with expenditures of $14.46 billion. The deficit is attributed to a $986 million drop in resource revenue from falling oil and potash prices.

Finance Minister Kevin Doherty insists this is a manageable deficit and the spending increases are focused on areas that will keep the economy strong through challenging times.

“We didn’t think it would be prudent at this point in time given the situation in the economy to pull back spending dramatically which would result in perhaps the layoffs of individuals that work in government, our third party sector, closing facilities,” Doherty said.

OPPOSITION QUESTIONS TIMING

In response to the budget, NDP finance critic Cathy Sproule is questioning the timing of the budget and asking why no money was set aside during years of resource wealth.

“This government didn’t want people to know how badly they have squandered their decade-long ride through high commodity prices and through sheer luck some of the best economic years in our history,” Sproule commented.

She also maintains that there are cuts to health and education spending in this budget and says some costs are being shifted around.

TAX CHANGES NO INCREASES

“We campaigned on a promise not to raise taxes so we are going to maintain that campaign promise and there is no tax increase in this budget,” Doherty said.

While the government is not increasing any taxes, there are some changes to tax credits.

The province is scrapping the active families’ benefit, which offered a tax credit to give families a break on registration for sports and other recreational activities. The federal government made the same decision in its budget in March.

There are no increases to any sin taxes, but the government is making a number of tough decisions to tackle the deficit.

Saskatchewan people will have to pay $5 more for children and seniors’ prescription drugs. The cap on drug costs will rise from $20 to $25. That impacts roughly 66,600 families costing them approximately $20 per year.  The change will also affect 120,000 seniors costing them on average $80 per year. The province says the cost of the drug plan has grown by $10 million every year since 2013. The change is meant to offset the increase by about $6.75 million this year and $9 million annually after that.

CUTS TO SPENDING

The Buffalo Narrows Community Correctional Centre will close and most inmates will be sent to Prince Albert. This could mean the loss of 15 jobs, although the workers will be offered positions elsewhere. Closing the facility is expected to save the government $1 million annually.

The government will no longer fund five of seven urban municipal parks including: Battlefords River Valley, Chinook Parkway in Swift Current, Wakomow in Moose Jaw, Pehonan in Prince Albert, and Tatagwa in Weyburn.  By cancelling this funding the province is set to save $540,000. Wascana Park and Meewasin Trail will continue to receive funding but will form part of the discussion on transformational change.

A drop in funding for a number of aboriginal justice programs and some changes within social income assistance programs are also targeted to reduce government spending. The province is cutting down spending on things like the community justice and alternative measures program, the Aboriginal court worker program and Aboriginal police consultation groups.   

In last year’s budget the province cut the Saskatchewan Employment Supplement for children over the age of 12, but kept supporting families who were already part of the program with kids ages 13 to 18. Now the grandfathering provision is dropped and that’s supposed to save the government $2.5 million this year.

SPENDING ON HEALTH, EDUCATION AND CAPITAL PROJECTS

Once again the three biggest ministries see the bulk of the spending. Health gets the biggest percentage of dollars with a record $5.17 billion which includes a $20 million boost dedicated to reduce surgical wait times.

Education gets $2.2 billion, which includes continued spending for the nine new joint-use schools, building repair and maintenance and previously-announced new child-care spaces.

Municipalities will get the same revenue-sharing commitment at $272million, and $390 million will go to agriculture.

On the capital front, the government isn’t holding back on the spending with a record $3.5 billion being spent on infrastructure across government and Crown corporations. $1.7 billion is earmarked for schools, healthcare facilities, highways and municipal infrastructure.

The last provincial payment for the new Mosaic Stadium also flows from this budget at a cost of $25 million.

The province will be borrowing about $1 billion in part to pay for some of the capital projects.

“I don’t like debt, but at the same time I am not prepared, along with my colleagues, to dramatically reduce spending and shock the economy and literally put people out of work,” Doherty explained.

The total public debt for the province is increasing to $14.8 billion in 2016-17.  

The finance minister reasoned that this type of debt is manageable.

“Why would you put money away into a savings account that would maybe pay maybe 0.5 per cent when you are still paying 3.5 per cent on debt maybe outstanding on a credit card if you will?”

TRANSFORMATIONAL CHANGE

There is a lot of talk about “transformational change” which means a discussion on the possible overhaul of how public service is delivered in our province and what government should be paying.

The Ministry of Health will appoint a commissioner in the coming days to reduce the number of health regions in the province.

“What are the core delivery services that government ought to be providing in those major areas? And that is going to be the crux of this transformational change discussion,” Doherty said. “Everything is on the table, I know that sounds cliché but I literally mean that, on both the expenditures and the revenue side. We have perhaps a new normal on the revenue side and we are all in this together and we need to work together.”

Health regions, school divisions, universities, municipalities and more will have to answer a series of tough questions about how they operate.

One example of transformational change is asking how neighbouring municipalities can work together to deliver services in a more collaborative way.

For post-secondary education those questions might include asking if the two major universities need to double up on colleges of nursing and engineering.