Finance Minister Wes Sheridan announced his 2011-12 budget Wednesday. CBC

P.E.I. Finance Minister Wes Sheridan projected a $42 million deficit for the province Wednesday, $2 million more than he estimated it would be at budget time last year.

The budget contained nothing in the way of major announcements. Expenditures are expected to go up $19 million, about 1.25 per cent. The largest increases are in education and health. Both budgets are up about three per cent, but the new money is mostly consumed by increases in salary.

Sheridan devoted much of the early part of his budget address to federal transfers.Provincial revenues are projected to go up significantly, $42.7 million, while money from federal sources is projected to fall $11.2 million.

"Our challenges ... are being compounded by unilateral and, we believe, unfair reductions in core federal transfers," said Sheridan.

Last April Sheridan predicted a $54.9 million deficit for 2010-11. The latest estimates shave a few hundred thousand off that, dropping it to $53.7 million. Sheridan also introduced a plan last April to eliminate the deficit by 2013-14. That plan included a $39.7 million deficit in 2011-12. Sheridan said this year's unexpectedly high deficit will not affect his overall target.

"In 2013-14 we will achieve balance as we predicted," Sheridan told a media briefing before presenting the budget.

As expected sin taxes are up. Tobacco taxes will go up at midnight Wednesday: $5.90 on a carton of 200 cigarettes and $6.58 on 200 grams of fine cut tobacco. That is expected to generate an additional $4.8 million annually. Liquor prices are also going up, but the budget did not specify when or by how much. Sheridan hopes to raise another $5 million from those sources. He said the two tax increases would bring prices in line with the rest of the region.

There are suggestions some government fees would be going up. Revenues from motor vehicle licences and permits are projected to raise another $1 million, a 6.75 per cent increase. In total the government is looking for another $1.5 million from licences and permits.

While the budget did not contain any significant new expenditures, as might be expected in the last budget before an election, the budget speech did contain a significant amount of election rhetoric, with repeated references to 2007, when the Liberals came into power.

• "Our economic growth performance since 2007..."
• "Our agricultural industry has also seen significant improvement since 2007."
• "Since 2007 Islanders have benefitted from lower taxes on gasoline."
• "...from $71 million in 2007 to over $88 million."
• "Since 2007, enrolment at UPEI and Holland College."
• "Since 2007, this commitment has dramatically improved PEI's student-teacher ratio."