Saskatchewan handed out nearly 100 pink slips on Wednesday as the government unveiled a slimmed-down budget and plans for a major reduction in the civil service.

The province says 98 layoff notices were going out Wednesday as part of a plan to reduce the size of the public service. (CBC)

Over the next four years, the province wants to cut 1,800 positions from its current payroll of 12,000, Finance Minister Rod Gantefoer announced.

Gantefoer told the legislature that current spending levels were unsustainable, so tough decisions had to be made.

"We have chosen to make the right decisions today because we know what it means for our children tomorrow," he said. "It's not the easy path, but it is the right path."

Opposition Leader Dwain Lingenfelter quickly ripped into the ruling Saskatchewan Party for embracing "deception and deficits."

"This is a budget that should not be trusted, delivered by a government that should not be trusted with the finances of the province," the New Democrat said.

Saskatchewan Finance Minister Rod Gantefoer released the 2010-2011 budget in the legislature on Wednesday. (CBC)

This year, 529 government positions are being eliminated — some in programs that are winding down, others through attrition.

The budget projects spending of $10.1 billion for the fiscal year that begins April 1, down by $121 million, or 1.2 per cent, from the year before.

Although Gantefoer called the budget balanced, with a $20-million surplus, the province had to dip into its Growth and Financial Security Fund, the so-called rainy-day fund, for $194 million. Otherwise, there would be a $174-million deficit.

Less money for road projects

Capital projects — roads, bridges and other infrastructure — are responsible for much of the reduced spending. Total capital spending is pegged at $632 million.

The budget includes no changes to income tax or provincial sales tax.

Projected revenues, however, are down $711 million from 2009, to $9.9 billion.

It's a big change in direction for a government that last year budgeted for a 12 per cent spending increase and expected, wrongly as it turned out, to see an unprecedented $1.9 billion in potash revenues.

This year, the expectations have been scaled back. The province thinks it will make only about $220 million from potash revenues. Oil is back as the province's biggest natural resource cash cow, with $1 billion in expected revenues.

The province expects to save $30 million this year reducing the payroll. Layoff notices went out Wednesday to 61 people in government departments and 37 at Crown corporations, including the Saskatchewan Communications Network, a TV operation the government is shutting down.

As Premier Brad Wall suggested earlier this month, health spending is going up, to $4.2 billion, but the increase of three per cent is much smaller than in recent years.

The budget also boosts the price of alcohol — a dozen bottles of beer will cost 75 cents more — and hikes cigarette taxes by 2.7 cents a cigarette, or 67 cents for a pack of 25.

Fewer tax-free cigarettes

In a move the government had dropped hints about last week, new restrictions will be put on the number of tax-free cigarettes First Nations people can buy at reserve stores. Until now, those with treaty cards could buy three cartons — 600 cigarettes — a week without paying tobacco taxes. This has been reduced to one tax-free carton a week.

It's a dishonest budget, Opposition Leader Dwain Lingenfelter says. (CBC)

Rumours of the change angered First Nations leaders, who said it would be a violation of their jurisdictional integrity. The province says it just wants people to cut down on smoking.

The province also confirmed it is ending universal subsidies for chiropractic services to save $10 million. Low-income residents will be covered for a maximum of up to 12 visits a year.

Despite Gantefoer's insistence the budget is balanced, Lingenfelter said the deficit would actually be $622 million if the summary accounts were considered. These accounts cover all of government, including Crown corporations, and not just the line departments.

Lingenfelter was also critical of Saskatchewan's debt levels, saying the summary statement of debt shows an increase from $7.9 billion in 2009 to $8.4 billion this year.