P.E.I. budget deficit for next year forecast at $112 million
Government cuts $53M from deficit estimate but will still stay in the red
The P.E.I. budget deficit is on the way down, but the King government does not see it being eliminated in the next three years as the province continues to emerge from last year's pandemic-induced recession.
Finance Minister Darlene Compton presented the 2021-22 budget in the legislature Friday morning.
"There was a lot of guessing, a lot of uncertainty, when we came up with that budget," Compton said of the process of putting together the 2020-21 budget, as she spoke in the media lockup before delivering her budget speech.
Overall, the province did much better in 2020-21 than it was projecting last June, when Compton predicted a record $173 million deficit. On Friday, she projected the deficit for the current fiscal year, ending this month, will be $120 million.
That improved performance takes the deficit out of record territory. Back in 2003-04, the deficit was $125 million.
Three-year plan to eliminate deficit outlined
The deficit for next year is projected to be $112 million. A three-year plan presented with the budget has the deficit falling to $27.9 million in 2023-24.
Looked at broadly, the current forecast for 2020-21 bears little resemblance to the estimates tabled in June.
- Provincial revenues: Up $13M to $1,218M.
- Federal Transfers: Down $58M to $944M.
- Program expenditures: Down $80M to $2,070M.
The drop in program expenditures and federal transfers are related. Infrastructure spending was $49 million lower than the estimate. That corresponded to $67 million less in federal infrastructure funding.
Due to COVID, some projects were delayed. Those projects are still in the hopper.- Darlene Compton
"Due to COVID, some projects were delayed," said Compton.
"Those projects are still in the hopper."
The province is aiming to ramp up infrastructure spending again in the coming year. The estimate for the coming year for the Department of Transportation and Infrastructure is $202 million, up from a $170-million spending estimate for this year.
Federal infrastructure program funding is scheduled to almost double, from an $85-million forecast this year to $158 million next year.
Some indicators rosy
In her budget speech, Compton noted the Island economy had some strong points in 2020, which would have helped provincial revenues.
Farm cash receipts were up seven per cent. Lower fuel prices helped the fishing industry offset lower prices. Both exports and retail sales were up, and investment in building construction rose 10.7 per cent.
Compton said the Island economy was in a good place before the pandemic hit, and she anticipates there will be a lot of pent-up demand and economic activity in the coming months and years.