Mid-year update shows current budget remains a red-hot mess

There is no quick and easy way to extinguish the dumpster fire that has been the 2017-18 Saskatchewan budget.

March’s blazing inferno may be over, but what smoulders will continue to scorch Premier Brad Wall and whomever becomes his successor.

In Wednesday’s mid-year update, current Finance Minister Donna Harpauer did about as good a job as anyone could juggling the hot embers she inherited from predecessor Kevin Doherty.

Harpauer’s problem, however, is even the good news isn’t all that great.

Yes, overall public debt is down $323 million, but it’s largely because a major SaskPower hydro electric development in the north is being shelved because of a slowdown in the mining sector.

Yes, the 2017-18 deficit is down a modest $6 million from the $685 million expected in March. But given the budget’s extreme cost-reduction measures, that’s like finding a nickel under your couch cushion.

And the cost of this modest deficit reduction is the complete draining of the $300-million contingency fund, leaving the government vulnerable to whatever fluctuations we see in the other half of this fiscal year.

Moreover, as wise as it was for Doherty, Harpauer, et al. to set aside money in this unsettling year, was this emergency fund gobbled up by natural disasters? Nope.

The lack of crop insurance claims actually saved the Agriculture Ministry $91 million so far in this budget, while forest fires only cost the Environment Ministry $14 million more.

So where did that $300-million contingency fund go?

Well, according to the NDP Opposition on Thursday, a lot of it went to offset budgetary planning disasters.

Consider all the funding the government had to restore: $4.8 million back to libraries; the 10 per cent cut to communitybased organizations; $600,000 to funeral costs for the indigent; the Hearing Aid Plan that was to be terminated on July 1; $3 million in SaskPower/SaskEnergy grants-in-lieu to specific towns and cities from the initial $36-million cut; $20 million to the University of Saskatchewan’s College of Medicine; reducing the one-per-cent cut to the corporate tax rate to 0.5 per cent; the provincial sales tax exemption on service portion of oil and gas industry drilling; and extending the PST implementation on insurance to August from July and the PST exemption on construction material to June 30.

One of the biggest mid-year budget adjustments was the $55 million less in PST revenue the government took in because finance officials couldn’t anticipate the impact of not being able to collect the PST on already started commercial building developments.

Yes, it’s impossible for the government to anticipate every potential effect when such big and necessary changes are afoot.

And, yes, credit the Sask. Party government for recognizing this province can’t simply rely on the uncertain resource sector (its oil revenue projections are off $51 million) or sometimes even income tax (surprisingly, off $110 million due to poorer employment situations).

Hiking the PST was tough, as was axing STC, which helped save $20 million in transportation costs.

However, it should be noted the $1.995 billion the government now anticipates collecting from the PST in 2017-18 is $811 million more than the $1.184 billion the province collected on a five-per-cent PST last year.

And Finance Ministry figures aren’t showing much change in eating-out trends (the PST was extended to include restaurant meals).

But all this said, with oil and gas and income tax revenue projections off and collecting $55 million less on PST revenue, was it fair for Harpauer to say Wednesday this train wreck of a budget is “on track?”

In fact, when asked Wednesday about the budget centrepiece of a 3.5-per-cent wage/benefit rollback across the public sector, Harpauer said: “We’re not even remotely close in savings.”

A lack of wage reduction savings explains why there’s no contingency fund anymore.

But it’s really just one of many ill-conceived notions in a budget that’s been a red-hot mess.