Update: $1B deficit forecast for Saskatchewan by end of April

November 22, 2016 - 6:23am Updated: November 22, 2016 - 4:11pm
The mid-year financial report forecasts a $1 billion deficit by the end of the fiscal year.
File Photo/980 CJME
The mid-year financial report forecasts a $1 billion deficit by the end of the fiscal year.

The financial picture for Saskatchewan is far from rosy as a $1 billion deficit is forecast by the end of the fiscal year.

That's the picture coming from the mid-year financial report government released Tuesday.

"Continued low oil and potash prices are having a greater impact on revenue than expected," Finance Minister Kevin Doherty explained.

"It has now been a full two 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."

The deficit sits at $1.042 billion. From the budget in June, taxation is down $400 million, non-renewable resources – like oil, gas and potash – down $179.6 million and $236 million loss in repayments from the Worker's Compensation Board.

The one bright spot is an expected increase in federal transfers to the tune of $321.5 million.

In spite of this black hole, government will spend $285 million more than forecast in the second half of the fiscal year. Higher crop insurance claims and pressures in health and social services are to blame.

In total, government saved $217 million in restraint measures and savings. It has also announced a public sector hiring freeze.

"Public sector salary 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.

Government is also hinting that more spending restraint measures will be implemented into the coming year.

Deficit reaction

The NDP is blaming fiscal mismanagement for the province's current deficit.
Finance critic Cathy Sproule contends the government shouldn't have drained the rainy day fund that was left by the NDP in 2007.
"Unfortunately that's been spent in the best times this government has ever seen in terms of revenues, so there is nothing to fall back on right now," Sproule argued.
She contends the government needs to get more people working instead of making cuts to job training programs.
The Canadian Taxypayer's Federation wants more action to reduce the deficit.
"In terms of trimming back spending, we got to hold the line on that, it is not going to be easy, it is not going to be fun, but that is what folks are doing at their kitchen tables and government needs to do that too," Prairie Director Todd MacKay said.
MacKay says those in Saskatchewan without work have no appetite for tax increases.

Twitter @smillsSK