As expected Saskatchewan will run a large deficit this coming year due to COVID-19.
The province is posting a $2.4 billion deficit forecast in its 2020-21 budget that was tabled Monday.
The revenue forecast for Saskatchewan is $13.6 billion, down $1.2 billion or eight per cent from last year. The budget includes $16.1 billion in spending, up $1.1 billion or about seven per cent.
According to the government, the shortfall is due to reduced provincial revenues and additional costs related to the pandemic. In particular, the province points to the shutdown of domestic and global economies along with the oil price collapse.
“This is a pandemic deficit, not a structural deficit,” said Finance Minister Donna Harpauer at the embargoed news conference with reporters Monday morning.
“Prior to the pandemic, Saskatchewan was on track for balanced budgets last year and this year. I am confident that as Saskatchewan’s economy recovers, our revenues will also recover and we will get back to balance in the coming years without having to cut programs and services.”
Harpauer also noted the deficit is not going to be as high as other provinces, noting Manitoba was talking about a $5 billion deficit and Alberta may be as high as $20 billion.
The budget was presented Monday afternoon in the first day back in the Legislature since the legislature was suspended on March 18. That date also happened to be the original date for the 2020-21 budget to be presented.
Instead, budget estimates were tabled on that date, and a full budget was pushed back until the legislature reconvened Monday. Many of the items in the budget had been included in the estimates in March.
Due to pandemic restrictions a limited number of MLAs were in the legislature for the budget address, with 10 MLAs from the Sask Party and five from the opposition NDP.
Despite the deficit numbers, Harpauer expressed confidence to reporters about the future.
“Saskatchewan is strong, our province’s fiscal foundation remains solid and our economy will recover,” Harpauer said.
“Saskatchewan people are resilient and our province has what the world needs as the global economy emerges from the pandemic. Every province, every jurisdiction in the world has seen its economy and finances hit hard by the pandemic. Saskatchewan is no exception, but we are better positioned than most to provide the support people need to get through the pandemic and to see our economy recover and jobs return.”
There were some significant inclusions in the budget from a Battlefords perspective:
North Battleford will be seeing a portion of the $33 million increase towards mental health and addictions services in the budget. This includes an increase of $1.6 million towards the operations of Saskatchewan Hospital North Battleford.
As well, over $1.7 million has been allocated will go to costs associated with 28 new detox beds in several locations including North Battleford. In particular $400,000 goes towards establishing a provincial Rapid Access to Addiction Medicine clinic based in North Battleford. This is not a new announcement, as this was included in estimates in March.
According to the province’s news release these clinics “provide immediate access to addictions treatment by multidisciplinary teams in order to reduce emergency department visits, shorten wait times and improve outcomes for patients.”
Overall, $6.18 billion is going to health, up $288 million from last year, with $435 million going towards mental health and addictions. $172 million is going to health care capital spending.
Also included in the budget is education spending. $8.5 million has been allocated to begin planning and design on a number of school projects, including renovations and an addition to John Paul II Collegiate in North Battleford. Again, this had been included in estimates in March.
Overall the province is allocating $3.36 billion to education, including the pre-K to Grade 12 and the post-secondary sectors, which is up $79.4 million.
$168 million in education capital spending was announced. There is also a $42 million increase in school operating funding including $20 million to fund the teachers’ collective bargaining agreement.
The budget takes into account some initiatives announced in the last number of weeks since the beginning of the pandemic. This includes a $3.1 billion investment to build hospitals, schools, highways, municipal and Crown corporation infrastructure. It also includes investment of $7.5 billion over the next two years as part of its capital plan, which includes the $2 billion stimulation package that was announced in May.
“These are projects that will result in much needed economic activity and jobs,” Harpauer said. “Saskatchewan is fortunate to be in a strong financial position to make these kinds of important capital investments in every part of our province.”
The budget also includes over $1 billion in support for individuals, businesses and for initiatives to recover from the pandemic.
$278 million in Municipal Revenue Sharing is in the budget, up nearly $27 million from last year. It was also noted the budget invests over $571 million in direct provincial support to Saskatchewan’s municipalities, an increase of $137 million over last year.
There is $171 million in new capital funding for third parties, including $150 million in the Municipal Economic Enhancement Program for shovel-ready infrastructure projects. Another $205 million is being directed to government-owned capital assets such as schools, hospitals and highways.
Also included in Monday’s budget are the following commitments:
More than $900 million is towards new support to fight the pandemic, including an additional $502 million of new expense forecast after March 18 for COVID-19 related support programs and economic stimulus.
A $200 million health and public safety contingency is being set aside to address future pandemic-related expenses such as a possible resurgence of the virus.
$1.49 billion is going to social services and assistance, which is a $58 million or four per cent increase over last year. This includes a $30 million increase for child and family services and $10.9 million for third party providers.
The budget includes targeted tax measures to ensure new activities in pipeline development and fertilizer production, including the Oil Infrastructure Investment Program and a new Saskatchewan Chemical Fertilizer Incentive is being introduced, providing a 15 per cent tax credit. The Manufacturing and Processing Exporter Tax Incentive is being extended an additional three years.
$5 million is going towards identifying opportunities for irrigated agriculture in Saskatchewan and to further develop land and water resources.
A PST rebate for new residential home construction is being introduced of up to 42 per cent of the PST paid on a new house contract up to $350,000, excluding the land, for new homes purchased after March 31, 2020 and before April 1, 2023.
$715 million is going towards highways and infrastructure including $411 million for strategic capital investments to improve safety and efficiency on highway corridors. More than 1000 km of highways will be upgraded as part of this budget including multiple sets of passing lanes.
$85 million is being allocated to the Saskatchewan Public Safety Agency going towards wildlife mitigation work, upgrades and maintenance of the aerial fleet, training of municipal firefighters and first responders and for emergency preparedness planning for municipalities.
Also, there is an increase of $14 million to fund operations of community-service organizations.
