A drop in provincial revenue of $600 million has put further speculation into Saskatchewan’s expected $434 million deficit. This revenue drop has possibly pushed the deficit closer to $1 billion.
“The deficit we’re forecasting for this financial year is going to be higher. I don’t have a number today, but we’ll provide that during the mid-year update,” said finance minister Kevin Doherty. “Where some of the problems lie is in the current fiscal year, on the revenue side.”
Doherty stated there has been a further deterioration in personal income tax, corporate tax, provincial sales tax and fuel tax, leading to the drop in revenue from what was forecasted in the province’s June budget. In the non-renewable resource sector, there has also been a drop in revenue of about $200 million.
Doherty said this drop can be attributed to a decrease in the value of potash and uranium prices. He added the forecasts in June have proven fairly accurate for the oil and gas sector.
While speaking with the media last week, Doherty admitted it will be very difficult to balance the deficit Saskatchewan faces this year. He added that although revenues are down, some of that decrease will be offset by various funds from the federal government.
“We’re going to see some difficulties on the revenue side. We continue to see some pressures on the expenditure side. There’s utilization pressure in health-care, in social services, the PDAP claims coming to fruition from the flooding earlier this summer and from a late harvest,” said Doherty. “We’re just getting updates from crop insurance, but there’s going to be increased crop insurance payouts due to wet weather in late September and throughout October.”
Doherty said one of the biggest implications of the revenue drop will be that some campaign promises made in 2016, 2011 and even 2007 may not be affordable, anymore.
“There have been some campaign promises made by this party that have costs associated with them that will perhaps, be suspended or be rolled back,” he said. “We have a level of spending that is not sustainable, at the current level of what our revenues are. We’re not looking to impose any new taxes in this current year.”
Doherty stressed that the main goal is making sure core services in the province, including health care, education and social services, are sustainable in the long run. He noted that the possibility of a federally imposed carbon tax could also be an additional stressor to Saskatchewan’s current economic situation.
Doherty noted that it isn’t t all gloom and doom, saying the debt-to-GDP ratio and interest payments on public debt in Saskatchewan are lower than in previous years, and that a manufacturing report last week indicated that year over year manufacturing sales have grown, which bodes well for the provincial economy.
Doherty, when asked about whether or not there would be tax increases considered for the coming fiscal year, said, “all things are on the table” for the 2017-18 fiscal year.
He added, “These include revenue measures, and with revenue measures, that doesn’t necessarily mean a tax increase. We’re perhaps looking at tax exemptions that exist in the province, and eliminating some of those.”