Moe shelves budget plans as virus looms over Sask.
Next months to feature high costs, ‘very unpredictable’ revenues
Saskatchewan’s government is shelving its full budget as COVID-19 rips apart its revenue estimates, and will instead release its spending plans Wednesday without a plan to pay for them.
Premier Scott Moe said the revenue numbers prepared weeks ago “really aren’t relevant today.” But he believes there’s a need to give Saskatchewan people more certainty about how the government will invest to support the economy.
“It’s important that the people of Saskatchewan know that we will be there to support whatever efforts are necessary as we traverse the next number of uncharted days and weeks,” Moe told reporters on Tuesday.
“We’re going to have a few months of revenue numbers that are very, very unpredictable.”
He said the government will update its revenue numbers “for certain by the first quarter.” He added that cabinet will operate through special warrant for a period, allowing it to access funds without passing a bill in the assembly.
Moe said the spending plan released on Wednesday will contain record infrastructure spending. In a statement, Finance Minister Donna Harpauer promised “spending increases in most areas, including a significant increase in health funding.”
“It includes a significant lift to the Saskatchewan Health Authority, which funds the doctors, nurses and other health professionals who are on the front line of the fight against COVID-19,” she explained.
Moe and his ministers have previously vowed that the budget would be balanced.
But that plan was crafted in simpler times. On Feb. 28, when the now-scrapped budget document was finalized, oil prices were floating around $50.
The benchmark for North American oil is now well under $30. Banks are predicting it will barely crack $40 on average over the year.
The Saskatchewan economy was expected to grow over 2020, according to February estimates. Now, RBC is predicting it will go into a recession, contracting by one per cent.
That would devastate revenues. Expenses are likely to surge over the year, widening the gap. Interest rates have plummeted. Harpauer acknowledged that could mean hundreds of millions more in pension liabilities.
Moe has promised the health system whatever is needed to deal with the COVID-19 crisis. That could be a great deal. The Saskatchewan Health Authority (SHA) has already ordered more ventilators to care for patients in respiratory distress.
“We do anticipate a number of different additional resources that will be required,” said Derek Miller, the SHA’S emergency operations centre lead.
But Moe said Tuesday that the spending plan to be released Wednesday will contain only “minor additions and adjustments over the past number of weeks.”
Tracy Zambory, president of the Saskatchewan Union of Nurses, argued that there has to be “a very concrete plan” to ensure funding is in the system.
“We need to make sure we are much better prepared so that we aren’t full of overcapacity. There has to be emergency funds made available for the COVID patients,” she said.
Jim Farney, head of the Politics and International Studies Department at the University of Regina, predicted that a deficit is inevitable for 2020-21.
“They’re not going to be able to come anywhere close anytime in the next two years to balance again, that’s clear,” he said.
In terms of spending, Farney believed in February that the government would use its election-year spending to try to reach out to teachers, farmers and small businesses, as well as residents in rural Saskatchewan. He still felt that way Tuesday morning.
“Given how this government deals with crises, I would say that’s still the political calculation. I don’t think they’ll move off that plan very much.”
He foresees some attempt to deal with the fraught education file, which topped the political agenda before COVID -19 outbreaks overwhelmed it.
“I would expect for political reasons that they’ll still budget more for education,” Farney said.
The school closure this week makes it tougher to predict where the needs will be. Infrastructure will be one. There is a backlog of more than $1.3 billion in deferred maintenance costs for schools and other education facilities.
The crux of the issue has always been classroom size and the increasingly complex needs of students. Farney doesn’t see that going away.
“Even if schools don’t start until September, there’s still going to be more kids than there were last year, and more of those kids will have more complicated needs,” he said.
According to the Canadian Mental Health Association (CHMA), the needs for mental health in Saskatchewan are immense — and likely to become even greater during a pandemic. Phyllis O’connor, executive director of the CMHA’S Saskatchewan Division, hopes the premier thinks about mental health as he commits funds for the crisis response.
“We’re already, as an organization, seeing an extreme upswing in people expressing anxiety about what’s going on. So mental health has to be part of the picture,” she said, adding that isolation is hard on people with mental health issues.
“This is causing a great deal of suffering for people, physically and mentally.”
O’connor cited a figure from the Mental Health Commission of Canada, which urges provincial governments to devote nine per cent of health funding to mental health. Saskatchewan is currently at slightly over six.
The government boosted targeted mental health and addictions funding by nearly $30 million in last year’s budget. But O’connor said much more is needed to bring down wait times. She said young people now wait as long as a year — even 18 months — to see a psychiatrist.