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Saskatchewan’s finances are looking a bit better after the first quarter of the fiscal year than they were at the mid-June full budget release.
The Government of Saskatchewan is projecting a $2.1-billion deficit for 2020-21 in its first-quarter budget update, which was released Thursday morning.
That’s $296 million less than was predicted in the provincial budget. At that time, the government said it expected to face a $2.4-billion deficit resulting from the economic impact of COVID-19.
Finance Minister Donna Harpauer said she’s optimistic about the province’s budget position.
She pointed to oil being back up, strong retail and wholesale sales and stronger job recovery. But she did point out that much of the change in position and increase in revenue came from federal transfers and it’s not clear whether more will be coming.
Looking ahead, the forecast didn’t predict a return to balance until 2024-25.
The update predicted deficits of $1.4 billion in the 2021-22 fiscal year, $855 million (in 2022-23) and $340 million (2023-24) before a $125-million surplus by 2024-25.
“Revenue will not return to pre-crisis levels until 2022-23, and expense growth is targeted at 1.5 per cent per year,” said a media release.
Harpauer said to get there, she recognized the next few years will have austerity budgets, but she maintains that doesn’t mean cuts.
“That just means minding spending. So 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,” said Harpauer.
She said the government has been in this kind of position before, having to find cost savings through efficiencies.
“We kind of hoped we were out of the woods, but we’re not and so we’ll just continue that exercise with each and every budget formation,” said Harpauer.
Harpauer didn’t rule out tax increases in the future, saying when government officials create budgets, they look at everything, but she did say it’s not very likely.
“Each and every jurisdiction within the country — and we also compete with the United States and we also compete with other countries — is going to be all putting forward taxation and policies to compete for investment. We’re all going to be pursuing that recovery and additional investment for growth,” the finance minister explained.
When asked whether she thought the people of Saskatchewan would be willing to go through years of austerity just to get back to balance, Harpauer said she thinks people recognize the benefits of a balanced budget and that Saskatchewan people think we should live within our means.
“I don’t think they want to pass deficits on to their future generations. And I think this will be supported that we need to do our best to get (to balance),” said Harpauer.
The province didn’t include multi-year forecasts in its budget update in June, but it did in this update, saying it now has more data to make those projections.
Saskatchewan recorded a deficit of $319 million in the 2019-20 fiscal year.
The June budget said Saskatchewan’s economy was expected to shrink by 6.3 per cent in 2020, but the first-quarter update now predicts a 5.5 per cent decline.
It also says the province’s economy should have a real GDP growth of 4.5 per cent in 2021.
According to the first-quarter update, revenue is to be $14.05 billion in 2020-21, up $398 million from the budget. The government said that’s due largely to $338 million in federal funding as well as a $56-million increase in resource revenue.
The province already has announced it will be shifting $40 million of its $200-million contingency fund to help school divisions prepare for a return to classrooms in the face of COVID-19.
The update said expenses are forecast to be $16.18 billion in 2020-21, an increase of $103 million from the June budget. They include increases of $72 million for the health system, $70 million for municipalities and $35 million for the tourism industry.
The first-quarter update says public debt is expected to decrease $455 million from the budget due to the change in the deficit forecast and lower Government Business Enterprise debt.
NDP response
The Saskatchewan NDP had a bone to pick with the fiscal update and forecast released Thursday.
Finance Critic Trent Wotherspoon said there was nowhere near enough detail in the numbers and, because the multi-year forecasts were released in an update after the budget was already passed, the forecasts won’t get the scrutiny they should have.
“I think we have very unrealistic projections, torqued projections, based more on political spin in a convenient way before an election than a prudent fiscal forecast,” said Wotherspoon.
Sask. NDP Finance Critic Trent Wotherspoon. Aug. 27, 2020 (Lisa Schick/980 CJME)
Wotherspoon said you can’t trust numbers the Sask. Party brings out before an election.
“What we have is a government that’s clearly out of touch with the reality that Saskatchewan people are facing,” he said. “(It has) a plan that leaves us in recession, and a plan that fails to step up to the needs of Saskatchewan people at this critical time.”
Wotherspoon said he was baffled when he heard the finance minister say it’s a time for austerity.
“We have an economy that’s in recession and people out of work. It certainly is not a time for more austerity and more cuts within Saskatchewan right now. It’s a time for the government to step up and to do their part and to make the investments that make a difference in people’s lives,” said Wotherspoon.
The NDP wants to bring the legislative assembly back to discuss the forecasts.
“If the Sask. Party has nothing to hide on these fronts, then this is the kind of document that should have been included in the budget,” he said. “If they have nothing to hide, right now we should be convening the legislature for the proper oversight of the kind of numbers that are brought forward here today.”
Wotherspoon said the NDP is committing to legislation that would require multi-year projections be included in budgets. He said the NDP would also create legislation that would require the provincial auditor to sign off on a report showing “the true state of our finances in the lead-up to each election.”
