Finance Minister Wes Sheridan's 2013-14 budget is not nearly as simple as he suggested it would be a year ago: his budget will both under-earn and over-spend.
- Fisheries and Rural Development
- Employment Development Agency
- Health and Wellness
- Innovation and Advanced Learning
- Tourism PEI
In April 2012 Sheridan presented a simple three-year plan to eliminate the provincial deficit. The provincial economy would grow 3.5 per cent per year, he said, and increases in government expenditures would be kept to a minimum: a 3.5 per cent increase annually for Health PEI, and zero for everyone else.
The budget delivered last week turned out to be far more complicated, and balancing the provincial books was put off for a year.
To start with, provincial revenues took a hit in 2012-13.
- Agriculture and Forestry: +2.8%
- Community Services: +4.6%
- Education: +1%
- Justice: +2.5%
- Finance: +4.2%
- Health PEI: +2.9%
- Tourism and Culture: +76%
Income tax was roughly on target, but other tax revenues — sales tax, property tax, gas tax, tobacco tax — were all down. The numbers suggest that people may have been earning but were holding on to their money.
For provincial budget planners, the net result was a downgrading of growth projections, from 3.5 to 3.0 per cent per year. That comes to about $10 million less annually. This puts revenue projections made last April for 2013-14 well off target.
On the expenditure side, Sheridan's 2013-14 budget looked little like the one he proposed last April.
Fewer than half of major agencies and departments, five, were flatlined in their funding for 2013-14. Seven saw significant increases, and two were cut.
- Innovation PEI: -2.2%
- Infrastructure: -6.7%
Health PEI did not receive the full increase it was promised, just 2.9 per cent, about $3.3 million less. Community Services got a bigger increase, with an extra $4.4 million or 4.6 per cent to get them through the coming year.
But the biggest jump by far went to Tourism and Culture. The $7.1 million added to that budget represents a 76 per cent increase in spending. The money is mostly for celebrations around the 150th anniversary of the Charlottetown conference, and renovations at Confederation Centre.
General government spending
The government has added an extra $8 million in contingency to the budget this coming year it may not need to spend. With markets recovering, it expects to be able to cut back on spending to prop up pension programs, saving close to $10 million.
There were some significant savings, most noticeably in infrastructure. A slowing down of the federal infrastructure program in the coming year means $6.2 million less will be spent there in 2013-14.
But overall there is more spending than planned a year ago. The 2012 plan would have seen a 1.3 per cent increase in spending overall, but the current plan is for a 1.9 per cent increase, which comes to about a $9.5 million difference.
In broad strokes the province missed its deficit target for 2013-14 by about $25 million, and that gap was created in roughly equal portions by not earning enough, and spending more than planned.