The government of Saskatchewan is expecting a larger deficit.
According to the mid-year update released by Finance Minister Kevin Doherty, the forecasted deficit has increased to $806 million, after a drop of $400 million in provincial tax revenue. Doherty blamed the drop on the decrease on commodity prices, such as oil and potash.
“It has now been two full years since the oil price started to drop in the fall of 2014, and we are seeing a much greater effect on corporate and personal income tax and the Provincial Sales Tax,” said Doherty, in a release sent out by the provincial government.
“To start moving the provincial budget back to balance, significant restraint measures are needed. Measures will be implemented now, with more to follow in next year’s budget.”
The government has said that a total of $217 million in restraint measures and savings are being put in place, including Crown corporations. A hiring freeze has also been put in place, with hiring reserved for positions deemed essential. A focus on restraining labour costs was also mentioned.
“Public sector salary expense across government is now about $6.3 billion a year, so if we are going to control government spending, we have to control labour costs,” Doherty said.
According to the financial update, corporate tax income is down by $81 million, followed by personal tax income down by $172 million, PST (Provincial Sales Tax) down by $128 million, and fuel taxes down by $20 million, when compared to the provincial budget estimates.
Non-renewable resource revenue is down $180 million from budget, with potash revenue down $141 million from budget primarily due to lower average prices.
The total revenue forecast is down by $322 million when compared to the original budget. The total expense forecast is also up by $285 million, due to an increase in crop insurance claims and “cost pressures” in social services and health.
“Government revenue is down and utilization of government services is up—that’s why we have a deficit,” Doherty said.
“Overall, non-renewable resource revenue is down more than $1.2 billion from what it was two years ago. Meanwhile, Saskatchewan’s population has continued to grow, and that has meant more children in schools, more people using our health system, higher use of our social assistance programs and more people utilizing other government programs and services.”
“Saskatchewan’s economy is more diversified than ever before. However, low commodity prices continue to be a challenge that we must meet with a strong financial plan and an eye to ensuring long-term strength.”