Sask. projects $463M deficit, finance minister says government surprised by quick economic rebound

Saskatchewan’s Finance Minister Donna Harpauer says the province is “back on track,” forecasting a $463 million deficit for 2022-23.

The projection is a far cry from the $2.6 billion deficit forecast from 2021-22. It is also lower than last year’s projection of a $1.7 billion deficit for 2022-23.

“We are seeing strong economic growth and job creation as we come out of the pandemic and as a result, the province’s financial outlook has improved significantly,” Harpauer said.

The finance minister says she is sticking to a plan to return to balance by 2026-27.

The finance minister is forecasting a balanced budget by 2026-27. (Duk Han Lee/CBC)

The government is forecasting a $463 million deficit for 2022-23. (Duk Han Lee/CBC)

Provincial revenues are expected to rise behind high demand for potash and oil. The government is projecting $2.9 billion in non-renewable resource revenue, up from $1.6 billion last year.

Overall revenues are forecast at $17.2 billion, up $2.7 billion from last year.

“While volatile world events have made commodity prices difficult to forecast, as always our revenue forecasts are based on cautious oil price projections,” Harpauer said.

“It’s too soon to tell if oil prices will remain high for an extended period and what impact that could have on revenues.”

Harpauer said Wednesday the evolving situation in Ukraine and increases in inflation are going to be monitored closely.

“The risk definitely in this budget and for all of us going forward is going to be how high will inflation go due to circumstances, both with the pressure spending through the pandemic as well as global issues,” she said.

“There is no doubt that the political climate due to what’s happening in Ukraine is a risk. Disruptions in the supply chain, which were already there are being even more accelerated due to the war.”

Overall, Harpauer told reporters the budget discussions were far more pleasant because of economic conditions.

“The surprise was how quickly our economy was recovering. It was actually positive experience because our revenues are strengthening that we didn’t anticipate a year ago.”

The government is basing the 2022-23 budget on several predictions. (Duk Han Lee/CBC)

The government based the number’s in Wednesday’s budget on the following predictions:

  • Real GDP — an increase of 3.7 per cent.
  • WTI Oil price  — $75.75 US/barrel.
  • Potash — $407 per KCl tonne US/KCI tonne.
  • Canadian dollar — $0.80 U.S.
  • Retail Sales —  up 0.5 per cent in 2022 & up 2.7 per cent in 2023.

Harpauer signalled as early as last November that spending would be modest. The budget shows an increase in spending of 3.1 per cent, or $531 million, for a total of $17.6 billion.

Public debt is forecasted to hit $30 billion by the end of March 2023.

Health care

The largest expense of the budget comes in health care, with a record-high $6.8 billion making up nearly 40 per cent of total government expenditure.

Harpauer said the government is spending to cut down its surgical wait-list, and hire and retain physicians, nurses and paramedics.

The Saskatchewan Health Authority’s budget has increased by seven per cent to a total of $4.2 billion.

The government is aiming to return surgical wait times to “pre-COVID levels” by the end of March 2025.

It is also spending $95 million to “sustain the ongoing pandemic response and continue protecting Saskatchewan people in the transition to living with COVID-19.” This money will go toward personal protective equipment, support for 58 acute care beds in Regina and Saskatoon, and operating costs.

The government is also creating a new independent agency that will work to recruit and retain health care workers.

It is increasing spending by $1.5 million to bring 150 health care workers from the Philippines to Saskatchewan, with a goal of reaching 300 by 2023-24.

The province is also spending $12.5 million to add 11 new intensive care unit beds, with an eventual goal of adding 31 beds by 2024-25.

The government is looking to recruit and retain physicians, specifically in rural Saskatchewan, and will spend $3.5 million to do so.

Mental health and addictions spending is increasing by $8 million and accounts for seven per cent of the overall health budget.

Education and social services

Overall education spending is $3.8 billion, up 1.3 per cent from last year.

Saskatchewan school divisions will receive $1.99 billion, an increase of $24.9 million from 2021-22.

The budget includes $7 million for school divisions to hire up to 200 full-time educational assistants.

Spending in social services increased by $45.7 million, or 3.4 per cent, from last year. The overall budget for social services is $1.4 billion.

The government is increasing Social Income Support basic benefits by $30 per month and shelter benefits up to $25 per month.

The budget does not include operational funding for second-stage shelters for women and children fleeing domestic violence, or direct funding for safe drug consumption sites.

PST expansion on entertainment events

The government said it will generate $21 million annually through adding PST on many entertainment events. 

It said it will match the GST on events including:

  • Sporting events.
  • Concerts.
  • Museums.
  • Movies.
  • Gym memberships.
  • Green fees.

“We did this with some hesitation,” Sask. Premier Scott Moe said on Wednesday. 

“We also are using those dollars to fund our surgical initiatives, our increase in funding to decrease that surgical waitlist that we’ve acquired.”

He said the government would rather reduce taxes in Saskatchewan but he said government sought to find a balance in the numerous revenue streams available to the province to and redistribute those effectively, to “impact families corner to corner in Saskatchewan.”

There are exemptions for amateur events, school activities, events by non-profits and children’s activities.

It is also increasing tobacco taxes as of midnight March 23 and expects to generate $12.1 million in revenue.

The province is spending $50.7 million to create a Provincial Protective Services Branch that will unite the province’s peace officers into one entity.

Overall spending in the area of Protection of Persons and Property is up by $91.1 million, for a total of $936.2 million.

The budget provides funding for a new Saskatchewan Indigenous Investment Finance Corporation. The government said it will “provide loan guarantees for projects that will help Indigenous people to participate in our growing economy.”

The program will offer as much as $75 million in loan guarantees “for private-sector lending to Indigenous communities and organizations for investments into natural resource and value-added agriculture projects.”

Film and television grant increased

The government is boosting its film and television grant through Creative Saskatchewan from $2 million to $10 million, saying that the “rise in streaming services means [it is] the time is right to attract new investment.”

The government cut the Saskatchewan Film Employment Tax Credit in 2012. 

A condition of the Creative Saskatchewan grant is “only Saskatchewan labour, goods and services are eligible for support under the program.”

“This investment is estimated to generate a $50 million increase in film and television production and millions in annual economic activity, including significant increased spending in the hospitality industry, which has been hit hard by the pandemic,” Harpauer said. 

Harpauer said the province is naming the Regina sound stage after the late John Hopkins, the long-time CEO of the Regina & Chamber of Commerce, who died last month after a lengthy battle with cancer.

NDP call budget ‘no help’ for Sask. people

Leader of the Opposition Ryan Meili speaks at news conference on budget day at the Legislative Building in Regina on March 23, 2022. (Moreen Mugerwa/CBC)

Opposition Leader Ryan Meili said the budget is not providing enough relief to Saskatchewan people.

“At a time when Saskatchewan families need a lifeline, the Sask. Party has thrown them an anchor,” Meili said.

Opposition finance critic Trent Wotherspoon called the budget “no help” to Saskatchewan people. He said the government did not offer relief for rising fuel and grocery costs, and instead increased taxes and fees.

“This is a budget with soaring resource revenues that don’t trickle down to people crushed by cost of living increases.”

Both Meili and Wotherspoon pointed to a small increase in education spending, 1.3 per cent, that trails spending increases in health (4.4 per cent), social services (4.3 per cent), and protection of persons and property (10.8 per cent).

“We saw an increase in education property tax of 2.6 per cent but only an increase of 1.3 per cent in education, so they are bringing in more and investing less.”

Meili said that when you take out slated increase in teacher salaries, the government is giving the 27 school divisions $6 million for staffing and supports out of a budget increase of $24.9 million.

“I know we’re going to be hearing from school divisions in the weeks ahead that they are going to be having to let teachers go and shut down programs.”

Capital spending

The government is spending $3.2 billion on capital projects in 2022-23.

Here are some of those spending commitments:

  • $52.9 million for continued hospital projects in Prince Albert and Weyburn, urgent care centres in Regina and Saskatoon and long-term care centres.
  • $95.2 million for 15 new schools and five renovations.
  • $452.5 million toward improvements of 1,100 km of provincial highways.
  • $18.1 million to update the aerial wildfire fleet.

Deficit projections

Last year, the government projected the 2022-23 deficit to be $1.7 billion. 

Here are the projections for the next three budgets:

  • $384 million in 2023-24.
  • $321 million in 2024-25. 
  • $165 million in 2025-26.
  • A balanced budget in 2026-27.

Harpauer said she is “optimistic” the deficits in future years will be lower than these projections.

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