DEFICIT SETTLES AT $1.22B
Revenues off $400M as expenditures $500M higher than planned
As the government closes the books on the 2016-17 fiscal year, the bottom line is the province has a $1.22-billion deficit — $914 million higher than budgeted.
“Our deficit was relatively on track from what we forecast back on March 22 when I delivered the budget and indicated a deficit in the neighbourhood of $1.2 billion,” Finance Minister Kevin Doherty said following the release of the first volume of the province’s public accounts on Friday.
Forecasted revenues were down about $400 million, primarily in taxation and non-renewable resources, and expenditures were about $500 million more than budgeted, he said. The province’s debt climbed $2.29 billion to $10.19 billion.
Of the $500 million, about $320 million was due to the last year’s late crop, which put significant pressures on Saskatchewan Crop Insurance, Doherty said.
A growing population put pressure on government services such as health care and social services and there were flooding claims from previous years to the Provincial Disaster Assistance Program.
“The auditor has gone through our financial statements and gave an unqualified opinion that they represent materially the true facts of the province’s finances,” Doherty said.
NDP MLA Carla Beck faulted the government for its projected oil prices.
“There is a real concern about the planning that went into this budget,” Beck, the MLA for Regina Lakeview, told reporters.
It’s a problem that could come up again. The province formulated the 2017-18 budget based on oil selling for around $56 a barrel. Since the release of the budget, oil prices have sat closer to $45 per barrel. Doherty said it’s frustrating to forecast the price of oil.
“If you look at budgets across the country that have oil forecasts in them, we’re all within two or three dollars of each other in our provincial budgets,” he said. “We all talk to the same private forecasters.”
Last fall, Doherty met with analysts in the potash and oil sector in Toronto. All were confident that oil would be between US$55 and US$60 a barrel.
“They were all wrong,” Doherty said. Every dollar that oil moves up or down in price in a year is worth about $16 million to the provincial treasury, Doherty said.
“So if you’re down $10 or $11 for the entire year, you’re out $160 or $170 million or so,” he said. “It’s difficult to pinpoint exactly where you want to spend taxpayers’ dollars when you’re basing your forecasts on private-sector forecasts that just get it wrong.”
Doherty is encouraged by activity in the oilpatch.
“Even at $44 or $45 per barrel, we’re seeing some additional drilling going on this year — much higher than we’d anticipated,” said Doherty, who is confident the government will get to a balanced budget in 2019-20 — “all things being equal.”
“If there’s a major crop failure this year — and in parts of the province, it looks like they need rain — none of us can control that,” Doherty said. “Those are the kinds of things that keep me up at night — worrying about what is the impact on our economy, because government has to be there for the people whether it’s natural disasters like forest fires or flooding, or if there’s a major crop failure.”
Beck said she doubts the government will reach its deficit targets given that a large part of their projections rely on $250 million in reductions in public sector wages.
“We’ve heard from the heads of the Crown corporations this week that within existing contracts, they’re not going to be able to achieve those reductions, so we will see what that looks like,” Beck said.