Policy expert surprised by election-year deficit
Sask. Party will also rack up more debt as it plans record spending
After 17 years of stewardship and an election on the horizon, there is some surprise that the government of Saskatchewan is projecting another deficit.
Finance Minister Donna Harpauer posited her final budget as the time to spend amid population growth, weakening natural resource revenues and a growing export market, but Jim Farney, Regina director of the Johnson Shoyama Graduate School of Public Policy, said the deficit is still odd given the political affiliation of the party and its track record.
“I'm really surprised to see this government run a deficit in an election year and run a deficit on the argument that they're going to have record spending in a number of key areas,” Farney said in an interview Wednesday. “That was something I just never thought I would see.
“They are a centre-right government that has struggled and failed to balance the budget.”
Looking at the Opposition, which is calling for more spending and tax cuts in the name of affordability, Farney said the political dynamic in the province is interesting to watch, especially for an election year.
At the same time the deficit is “very modest” and the budget doesn't add or expand any taxes. He and others will be looking for details coming out in the next several days from estimates.
Going into an election, there are headwinds facing the party, but to Farney's eye, the budget aims to show a government working hard to deliver services while also growing the province's economy.
Population growth was a big focus for the province this year as well, as a means to grow the taxation base. Taxing people over, say, resource revenue may not be a popular thing to do, but it does offer a greater degree of stability, Farney noted.
“Most of their scenarios have government revenue and GDP growth lagging slightly behind population,” he said. “That's a structural thing that the government can't really respond to, but is buried and I think an important part of the long-term story for the province.”
At the moment, the taxpayer-supported debt is “$21.1 billion at March 31, 2024, up from $18.1 billion the previous year” and self-supported debt is expected to be “$13.7 billion at March 31, 2025, an increase from $12.8 billion forecast in last year's budget.”
That's a grand total of $34.8 billion worth of debt racked up by the Saskatchewan Party government.
That's concerning for Gage Haubrich, Prairie director of the Canadian Taxpayers Federation (CTF).
“It's extremely disappointing,” he said. “I was here last year when the minister stood up and said we'd have a $1-billion surplus coming into last year. Now that's a deficit too.”
Money spent paying interest on a growing debt means money that cannot be spent elsewhere, Haubrich said.
“It's money that can't be used for tax relief, can't be used for programs of any type … its simply wasted,” he added.
The CTF would have preferred to see savings and less spending from the government, but they see the spending as important, even as the debt and the track record of continued deficits remains a concern that grows along with the debt.
“Regular people have mortgages, regular people have all types of debt, but the problem is that every single year the government comes back to Saskatchewan taxpayers and says, next year it's going to be balanced,” he said.
“It's becoming increasingly hard for Saskatchewan taxpayers to trust that they're actually ever gonna pay back this debt down in the future.”