Saskatchewan Premier Brad Wall told a gathering of rural municipal leaders this morning in Saskatoon that the drop in oil price translates into a 5-7 per cent drop in government revenues, or $600-800 million.

The Saskatchewan Association of Rural Municipalities (SARM) is holding its annual convention this week in the city. 

Wall said the government will have a balanced budget, so all expenditures are under review, including PST revenue-sharing.

"A revenue decline of this magnitude won't bring the operations of government to a halt, but it is serious. And it needs to be addressed, and it will be addressed," Wall told the convention. 

Some delegates expressed concern. At the convention yesterday, SARM's acting president Ray Orb said that less money from PST may force rural municipalities to delay road and bridge building and upgrading, or raise taxes.

That would run counter to Wall's economic strategy, which he outlined in this morning's address. The premier said he intends to maintain spending on infrastructure and keep taxes low to keep the economy humming. Wall told reporters if a cut-back in revenue sharing results in less spending or higher taxes at the local level, he would think twice.

"That's right at the heart of our decision. If by moving on revenue-sharing the unintended consequences are some sort of an interim tax hike for property-owners and/or a withdrawal of infrastructure, that goes against what we would like to do," Wall said.

He called a roll-back or limit on PST revenue-sharing "a very last resort, part of the list of emergency solutions to what's a very tough budget".

Wall also said the province's share of the cost of new teachers and schools in rural areas is about two thirds. He wants to bring it back down to 60 per cent, so rural education property taxes may have to go up. 

He also said in next week's budget there will be tools to encourage investment in manufacturing, processing and "corporate office presence." And, even in a tight budget, Wall said the province will maintain its commitment to agricultural research.