The entire province seems to currently lie in the shadow of what may be in the upcoming Saskatchewan budget.
The shadow has grown darker as the months have rolled along.
In June 2016, the deficit was estimated to come down at $434 million. By November, Finance Minister Kevin Doherty was before media saying he expected revenues to be down another $600 million due to less money raised from taxes and non-renewable resources.
Now the number has grown yet again.
Saskatchewan Premier Brad Wall now says the provincial deficit is up to about $1.2 billion, a message delivered last week to delegates at the Saskatchewan Urban Municipalities Association convention.
The reasons being given are by now familiar.
Oil and gas revenues have not been what the government expected. If there has been one constant with this government since first taking power in 2007, it has been a tendency to overestimate resource revenues to the detriment of the bottom line of its budget.
Moving forward it can be argued resource sector prices may have bottomed-out, but a huge rebound that will bolster government revenues in a major way seems unlikely in the next 12 months.
Then, the expenditures of crop insurance, a wet fall increasing claims, was noted as an unexpected drain on government dollars.
Certainly weather impact on crops can mean a larger investment in crop insurance than normal.
But unexpected costs are hardly new. In recent years, forest fires, repeated severe flooding, and now a wet fall impacting crops, have all cost more than expected over the last decade. Interestingly, all three areas can be attributed to weather impacts, which we might expect more of moving forward in the face of climate change.
So perhaps some of the impacts which have ballooned the deficit might have been better anticipated.
But the key now is what comes next.
The government can’t maintain such deficits, but is it reasonable to trim $1.2 billion in a single budget?
Or, would the combination of tax hikes, employee cuts, wage freezes, roll backs, and program cuts to achieve such savings drag the overall economy to a halt?
While the Saskatchewan Party has been in power for a decade through some of the best times in the province’s history, buoyed by a generally vibrant world economy, this budget may determine how history remembers this segment of our history.
They have painted themselves into a corner with red ink, and how they deal with the massive deficit and maintain programming and keep the economy rolling will tell us much about their ability to govern in less than the best of times.
