Get set for tough Saskatchewan budget, Wall warns

In a video designed to EDMONTON prime people for a rough budget Wednesday, Saskatchewan Premier Brad Wall couldn’t resist a shot across the border.

He warned that resource revenues have fallen dramatically and that, to fill the hole in the province’s balance sheet, there will be cuts and changes to the tax system.

“Some other governments have decided not to make the tough choices to control and reduce government spending and are simply continuing to run deficits indefinitely,” said Wall, in the video, which was posted Monday to YouTube. “We will not do that,” he said, emphasizing each word dramatically.

It’s safe to say that Wall was either talking about Alberta’s NDP government, which hopes to balance the books by 2023 but has not laid out a plan for that, or the federal Liberal government, whose finance department forecast decades of deficits if no policies are enacted to rein in spending.

In the video, Wall said his province will shift away from taxes on income and productivity and toward consumption taxes.

Put simply, Saskatchewan residents could be looking at higher sales taxes.

At a news conference Wednesday in Spruce Grove, Alberta Premier Rachel Notley said she’s content to balance the budget six years down the road and sees no need for a provincial sales tax, especially when the party didn’t campaign on it.

Wall’s embrace of consumption taxes has put the Alberta opposition in a tough spot, too. He’s normally a folk hero to conservative politicians in the legislature, but they are now looking to British Columbia’s relatively restrained per capita spending to find an unfavourable comparison to the current government.

With a $10.3-billion deficit, Alberta could use some revenue. A return to balance relies heavily on oil prices rising, but long-term forecasts have fallen below the price the government used as a benchmark in last Thursday’s budget.

Notley said she’s not worried because her government’s forecast is on the conservative end of private sector estimates. The budget also has a risk adjustment built into it that can be used to plug any holes up to $500 million.

Those oil price forecasts became an unlikely flashpoint in question period Tuesday. The Progressive Conservatives repeatedly used an article by University of Calgary economist Trevor Tombe to browbeat the government.

In his article, Tombe demonstrated how far the government’s forecasts outpace the futures market and notes that each $1 per barrel below the forecast would take $310 million from the public purse. In other words, the risk adjustment is worth less than $2 per barrel of cushion.

And if oil prices track the futures market — no sure thing in the volatile world of oil prices — Alberta’s deficit won’t get any lower over the next three years.

In his video, Wall said this kind of uncertainty is what Saskatchewan will be trying to avoid. In Alberta, the plan is to accept the uncertainty but with a fiscal cushion.

“We think we’ve given ourselves enough room,” said Notley.