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Questions are surfacing whether running back-to-back deficits in Saskatchewan is legal.
The opposition NDP thinks the SaskParty is breaking The Growth and Financial Security Act after Premier Brad Wall announced Monday, as a last resort, the province would be in deficit this year and next fiscal year, before returning to balance by 2017-18 because of a serious revenue shortfall.
The law states that a balanced budget must be maintained except in extraordinary circumstances, such as a natural disaster. If that’s the case, the law outlines how the government must report what the deficit is and why, while being required to reach at least an offsetting surplus the year after.
“This is a problem. What we heard from the premier is in violation to their very own law,” said NDP leader Cam Broten. “The spirit absolutely talks about the need to be open and clear with Saskatchewan people to say what the true state is and we don’t know … and as the legislation points out, what is the plan to deal with this and get out of it?”
Broten is calling for MLAs to return to the legislature for at least one week so that his party can properly question the provincial government and hold it accountable.
Premier, Finance Minister say law doesn’t apply to current accounting system
When asked about whether his party was breaking the law after he made the deficit announcement, Premier Brad Wall was quick to dismiss any contradiction of the legislation.
“It’s our view that it’s not a problem because of the nature of summaries when we switched to summary financial budgeting,” he explained.
Since the law was introduced, Saskatchewan has changed its accounting practices, going from two sets of books – the General Revenue Fund and the Summary Financials – to just one. The legislation refers to the General Revenue Fund, which the government no longer uses.
Finance Minister Kevin Doherty says the law does not apply to Summary Financial Statements, it only applies to General Revenue Fund.
“The legislation doesn’t even consider that at this point in time, doesn’t even pertain to Summary Financial Statements, it pertains to General Revenue Fund,” Doherty said. “It also talks about tabling a deficit budget. We have never tabled a deficit budget.”
He points out that last year the previous finance minister tabled a budget with a projected surplus. Due to the drop in the price of oil, the softening of potash prices and paying for the northern forest fires, there was a huge hit to revenues. Facing $500 million in revenue shortfall, the choice was to either: make cuts, raise taxes, or run a temporary deficit.
“This legislation is obviously outdated, it needs to be updated because of the fact we’re into summary financial statements, and we’ve not tabled a deficit budget,” Doherty said.
The SaskParty government won’t table a budget before the upcoming election. Instead, the finance minister will present a third-quarter update outlining the state of the province’s finances including the projected deficit by the end of February.
