Provincial deficit pegged at a record $2.4 billion
Pandemic crisis led to collapse of nearly every source of income
Saskatchewan’s government is promising a multi-year plan to balance the budget after unveiling a record-breaking $2.4-billion deficit on Monday.
But neither Premier Scott Moe nor Finance Minister Donna Harpauer will give any inkling of what will be in that plan, nor will they commit to releasing details before the provincial election set for Oct. 26.
Instead, they expressed hope that the economy will rebound as the COVID-19 pandemic lifts and the world once again comes calling for Saskatchewan’s food, fuel and fertilizer.
“We have a certain degree of measured optimism,” Moe told reporters.
Harpauer faced a barrage of questions about the government’s long-term plans on Monday morning, before she delivered a budget with $16.1 billion in spending but only $13.6 billion in revenue. She said returning to balance would take three or four years, while a plan to get there will require data that isn’t yet available.
“There’s no game plan for this,” she said.
She would not commit to avoiding tax increases or spending cuts beyond the current fiscal year, saying those considerations need to be studied at each budget cycle. But she hoped economic growth will return quickly to spare her from those unpleasant decisions.
“Is it going to be easy? No, it’s not going to be easy, and we’re going to have to have spending restraints,” she said, adding that major new programs are unlikely in the coming years.
“But I think that we can build our economy forward and regain our economy enough to sustain the services that we have going forward. Like I said, it’s not a cakewalk.”
The budget projects that revenue will plummet $1.2 billion compared to the 2019-20 fiscal year, which has itself sunk $319 million into the red after a disastrous fourth quarter with substantial investment losses.
The collapse in revenue for 2020-21 stems from steep declines in virtually every income source except federal transfers. Tax revenue is projected to fall $350 million. Crown net income will drop, partly due to shuttered casinos and lower utility bills.
Non-renewable resource revenue is forecast to drop $753 million — an astonishing 43 per cent. They are now at their lowest point in the past 20 years.
Expenses are up $1.1 billion to $16.1 billion for 2020-21. That includes $502 million in “COVID -related expense” the government has tacked on to spending estimates it first revealed in March, plus a $200-million health and public safety contingency fund.
Officials connected a total of $1 billion of spending to the pandemic. Besides the new support measures and contingency, Harpauer and her officials described various moves to redirect about $148 million previously earmarked for other purposes.
That includes $118 million used within the health sector for hospital equipment, testing supplies, PPE and operating costs related to the pandemic.
Harpauer began her remarks Monday morning by saying the 2020-21 budget “meets the challenges” presented by the pandemic. That echoes the title of the 2017-18 budget, which was called “Meeting the Challenge” and hiked provincial sales taxes.
NDP Leader Ryan Meili said the budget tabled on Monday is not a plan at all and is totally insufficient to rescue the province from recession.
“People are hurting more and more. They’re looking to today’s budget for some indication that the government has a plan. Unfortunately, they won’t find it. It’s not there,” he said.
Meili said the budget offers nothing for home care, child care or classrooms, all areas he promised to invest in if the NDP forms government as part of a recovery plan.
He said there is no forecast for future years in Harpauer’s budget, raising fears for what comes next as she pushes to return to balance.
Meili committed that an NDP government would not raise taxes on “Saskatchewan working families.”
But he would not give any sense of how long it would take the NDP to return to balance or the scale of spending he believes is needed to spur economic growth.
All told, public debt will shoot up by $3 billion to $24.4 billion this year. Compared to the size of Saskatchewan’s economy, that’s lower than most other provinces. Moe and Harpauer were eager to contrast their deficit to higher projections in Alberta and Manitoba.
But a budget is a guess — and guesses are harder to make these days.
The 2020-21 budget pegs the average U.S. benchmark oil price at US$30, lower than it is today but much higher than it fell during the darkest days of the crisis. It assumes a substantial recovery of Saskatchewan’s economy in 2021. Growth is projected at 4.6 per cent over that year.
There is no guarantee that will happen, and a second wave of infections could push Saskatchewan’s deficit even deeper.