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Saskatchewan is reporting a $1.13-billion deficit for the 2020-21 fiscal year — a significantly lower number than was forecast.
The deficit announced by Finance Minister Donna Harpauer on Wednesday is $1.3 billion lower than was predicted in the budget.
“Our year-end financial statements show that Saskatchewan is in a much better fiscal situation than we anticipated as life and the economy start to get back to normal following the global pandemic,” Harpauer said in a media release.
“Moving forward, our focus continues to be on protecting Saskatchewan people, investing in vital infrastructure such as highways, hospitals and schools and helping our economy grow and recover.”
An improved financial picture for the 2020-21 fiscal year will not affect the province’s path to balance the budget in 2026-27.
Harpauer told reporters the timeline for getting back in the black will depend on the economic recovery. She noted the government has budgeted $1.5 billion of stimulus spending and the province has been buoyed by some promising announcements of private investment.
“I am actually extremely excited and optimistic on the recovery simply because of the very, very substantive investment announcements that we’ve seen in the last two months. It’s pretty exciting,” Harpauer said during a media conference.
“Obviously, outside investors have confidence in Saskatchewan and see what we have to offer, so I’m very optimistic.”
According to the government, the projected deficit fell simply because revenues were higher than budgeted and expenses were lower than expected.
While expenses for agriculture, education and environment and natural resources were lower than forecast, those were partly offset by greater-than-budgeted health expenses.
Total revenue of $14.52 billion was up $875 million from the budget projection.
Every revenue category posted an increase over budget projections, except for taxation. Among the increases were transfers from the federal government to help fight COVID-19.
However, revenue was down $363 million from the 2019-20 fiscal year.
Harpauer said it’s hard to tell when income tax revenue will fully recover from “a pretty substantive distortion” thanks to COVID-19. However, she said once construction season picks up, the economic benefits will be felt as wages are spent at businesses. That has resulted in provincial sales tax revenue recovering “more than we anticipated,” she said.
“What will help those numbers recover on the personal income tax side is the employment numbers that we’re seeing that are so strong,” Harpauer said.
“But there is a two-year lag in our corporate tax numbers and a one-year lag in our personal income tax numbers.”
Expenses of $15.65 billion were $424 million lower than projected in the budget. The decrease was largely the result of fewer crop insurance claims being paid out.
“We had a great crop year, which again is a shining light for Saskatchewan through this COVID time,” Harpauer said.
The total expense was $444 million higher than the 2019-20 fiscal year. The biggest increases were COVID-related costs in health, economic development, and community development.
“Saskatchewan people are resilient and our province has what the world needs as the global economy recovers from the pandemic,” Harpauer said in the release. “We are seeing greater private investment recently, which demonstrates confidence in our province’s economy and solid fiscal foundation.
