COVID helps push Saskatchewan forecast deficit to $2.6 billion

COVID-19 has left Saskatchewan in a bigger hole than originally expected.

Before delivering the 2021-22 budget at the Saskatchewan legislature on Tuesday, Finance Minister Donna Harpauer said it was difficult to overstate the impact of the pandemic.

“It was not only a worldwide health crisis; the COVID-19 pandemic is also the largest shock to the Saskatchewan, Canadian, and world economies of any event since the Second World War,” Harpauer told reporters.

“It is a once-in-a-lifetime challenge that requires a significant response.”

As a result of COVID, the province’s plan to recover economically will take longer than anticipated — forcing the Saskatchewan Party government to break a campaign promise.

The 2021-22 budget has a forecast deficit of $2.6 billion. That’s to be followed by deficits of $1.7 billion in 2022-23, $1.2 billion in 2023-24 and $770 million in 2024-25. The government expects to return to balance in 2026-27.

During the fall election campaign, the Sask. Party committed to balancing the budget by 2024-25.

Harpauer said during the summer and fall of 2020, economic indicators were doing well and economists were predicting a reasonably quick recovery.

“And as we got into fall and early winter, all of that didn’t come to fruition,” she said. “There were additional health measures that had to be undertaken and so that economic recovery slowed down at that point in time.”

According to Harpauer, the government has put $4.8 billion into the fight against COVID, with $1.5 billion in this budget, $2 billion in the 2020-21 budget and $1.3 billion expected in the next two years.

The government has set aside $90 million for its COVID response over the next six months, believing most residents will be vaccinated by then. As well, $21 million will be added to the $134 million already invested in the Saskatchewan Safe Schools Plan.

However, there isn’t a contingency fund this time around. Harpauer explained that’s because the government can roughly estimate how much the pandemic will cost each month. But if there are extra expenses, like supporting businesses in a lockdown, it’ll be paid for.

“We will be there for those businesses in Regina that had to close due to those additional health measures,” she said.

Revenues this year are expected to be $14.5 billion, up $830 million from last year. Expenses are forecast at $17.1 billion, an increase of $1 billion from last year.

The total public debt is projected to be $27.8 billion, an increase of $4.2 billion from last year.

Despite the deficit, Harpauer said the province won’t be cutting services or significantly raising taxes.

However, the government is set to raise $12 million through a change in the Education Property Tax mill rate.

In 2021, those mill rates will be 1.36 per cent for agricultural properties, 4.6 per cent for residential properties, 6.75 per cent for commercial/industrial land and 9.79 per cent for resource properties.

From 2017 through 2020, those rates were 1.43 per cent for agricultural land, 4.12 for residential properties, 6.27 for commercial/industrial land and 9.68 for resource properties.

The change will cost residential homeowners on average $18 more a year.

The only other revenue generators are taxes on vaping products (20 per cent) and heat-not-burn tobacco products (20.5 cents per stick), and a $150 road use fee for electric vehicles, to be collected at the time of registration.

The government is forecasting a 3.4 per cent growth in Saskatchewan’s real GDP, but that follows a drop of 4.2 per cent in 2020 that affected the province’s financial picture.

Health, education and social services once again are the big-ticket items for the government, combining for nearly $12 billion in funding. There’s $3.1 billion in capital spending included in the budget.

Harpauer said when finance officials usually start putting things together in September for a budget, they have a starting point to work from and goals to meet. This budget has been different.

“We didn’t know where to set a goal this time,” she said. “It was a matter of the ministers and their respective officials presenting budgets that you didn’t know how far in the ditch we were going to be …

“There wasn’t a number that we were working towards; it wasn’t the tradeoffs the same. It was more of, ‘We need to be there through this, and we need to have stimulus through this.’ But there wasn’t that number that we were working towards.”

Health

The Ministry of Health is to receive a record $6.54 billion, up $359 million from the previous year. That funding includes a $90-million increase for the province’s response to COVID, including the rollout of its mass vaccination plan, the purchase of personal protective equipment and increased contact tracing.

The Saskatchewan Health Authority is to receive $3.96 billion, an increase of $221.4 million over the previous year.

An all-time high of $458 million is being set aside for mental-health and addictions programs and services, up $23.4 million from last year.

Investments are being made in youth-focused programs, suicide prevention and harm reduction and addictions treatment. However, Saskatoon’s Prairie Harm Reduction will not be receiving any additional funding than what it already receives.

There’s $6 million in the budget to hire 100 continuing-care aides for long-term care homes, $6 million to expand the province’s Autism Spectrum Disorder program to include children aged six to 11, and $5 million to cover the cost of an insulin pump for everyone who needs one. There’s also funding for continuous glucose monitoring for those under the age of 18.

The government is fulfilling another campaign promise by investing $6.7 million to reduce the cost of ambulance trips for seniors, dropping it from $275 per trip to $135.

The STARS fleet will be getting a new helicopter to be based in Regina at a cost of $1.4 million, and EMS crews are getting additional ambulances in Regina and Saskatoon through a $6.6-million investment.

The Saskatchewan Cancer Agency is getting $7.6 million more in this budget, increasing the total investment to $204 million.

Capital investments in health total $162 million, with funding for urgent care centres in Regina and Saskatoon, and proposed long-term care centres in Regina, Estevan, Grenfell, La Ronge and Watson.

Money also has been set aside to continue planning for hospitals in Weyburn and Prince Albert.

Education

The government is putting $3.75 billion into education, an increase of $391 million from the previous year.

School divisions are to receive $1.96 billion for operating expenses, up $19.2 million from 2020-21.

That funding covers the two per cent salary increase the province’s teachers received in their new collective bargaining agreement.

Child-care funding increases by $2 million to $75.5 million, which will help create 176 new spaces in licensed homes and 51 in licensed centres.

Post-secondary education is to receive $735 million, with $678.5 million for the province’s post-secondary institutions.

The government funding is to include $39.8 million for student supports, which will help cover an increase in the Saskatchewan Advantage Scholarship from $500 per year to $750 per year for eligible students.

The $190 million for education capital includes a $102-million investment in 16 new schools and the renovation of five others.

Those construction projects include a new elementary school in Weyburn and a new joint-use school to replace Argyle and St. Pius elementary schools in Regina.

Social Services

The social services budget is increasing $66.4 million in 2021-22 to $1.56 billion.

Among the programs receiving funding are the Seniors Income Plan and communication services provided by the Canadian National Institute for the Blind and the Saskatchewan Deaf and Hard of Hearing Services.

There’s a $6.7-million investment in community-based organizations, comprising a $4.2-million increase for those who work with people with intellectual disabilities and $2.5 million for those who assist at-risk children, youth and families.

There’s more than $660 million in the budget for programming to help people with disabilities.

Highways

The government is investing $830 million in the province’s roads and highways, an increase of $115 million from the previous year.

More than $520 million is earmarked for a twinning project on Highway 3 west of Prince Albert as well as passing lanes on highways 2, 3, 7, 12, 14, 16 and 39.

Those who drive electric cars — there currently are 403 registered in the province — will be paying an extra $150 at the time of registration as a road use fee.

The government said owners of gas-powered vehicles pay a fuel tax at the pump that goes to road maintenance. Since electric car owners don’t pay that, the government has decided to add the road use fee to even the playing field.

Other Details

The budget includes $845 million for programs around the protection of people and property, up $38.6 million from the previous year.

The Saskatchewan Public Safety Agency is to receive $92.4 million to co-ordinate the non-health response to COVID in the province. That funding will help modernize the province’s wildfire suppression fleet of aircraft.

The Public Complaints Commission is to receive $287,000 for the creation of a Serious Incident Response Team to provide oversight to the province’s police forces.

There’s $52 million in the budget for a new 216-cell remand centre in Saskatoon, $19 million for Phase 1 of Lake Diefenbaker irrigation expansion project and $16.5 million for capital projects in Saskatchewan parks.

Agriculture, which Harpauer called “the saving grace” of the province’s economy during the pandemic, is to receive $879 million — an increase of $81 million.

As promised during the election campaign, the government is reinstating the Community Rink Affordability Grant and the Active Families Benefit, and is increasing its investment in veterans services and clubs from $100,000 to $1.5 million.

Crown corporations are to spend $1.6 billion on capital projects. They’re also shelling out money for rebates that previously were announced — $175 million to cover SaskPower’s 10 per cent rebate to customers and $285 million for SGI’s Auto Fund Recovery rebate.

The Sask. Party also is following through with the Saskatchewan Home Renovation Tax Credit, which is expected to cover $66.4 million in costs in 2021-22.

The budget extends the Saskatchewan Technology Start-Up incentive for five years, providing a non-refundable 45 per cent tax credit to investors.

The government’s $465-million investment in municipalities includes $276 million in revenue-sharing.

Indigenous communities, businesses and organizations are to receive $194 million. Of that, $35 million is to replace gaming agreement transfers to First Nation and Metis organizations — a result of the closing of casinos due to COVID.

Saskatchewan also is spending an additional $5 million to open four new trade offices, joining those currently operating in India, Japan, Singapore and China.