PEI

P.E.I.'s 2020-21 budget deficit comes in $167M below initial estimate

What was once forecast to be a record deficit of $173 million for the 2020-21 fiscal year is has instead landed at $5.6 million, according to a release from the Prince Edward Island government Friday.

Deficit was pegged in opening months of pandemic at $173M, but ended up at $5.6M

'The low occurences of COVID on P.E.I., the fact that Islanders shopped local, really supported one another, the fact that the federal government was on board with supports, all of that played a factor,' says P.E.I. Finance Minister Darlene Compton. (Brittany Spencer/CBC)

What was once forecast to be a record deficit of $173 million for the 2020-21 fiscal year has instead landed at $5.6 million, according to audited financial statements released by the P.E.I. government Friday.

After boosting spending across almost every department in response to the COVID-19 pandemic, in June 2020 Finance Minister Darlene Compton projected the record deficit.

By March 2021, however, Compton revised her deficit projection to $120 million — out of record-breaking territory. 

Friday, as part of tabling the province's full public accounts, Compton revealed the final deficit of $5.6 million. 

"This reduced deficit results from higher than anticipated revenues due to stronger than expected revenue from provincial taxes and federal government transfers," a government release stated. 

The province received an additional $88 million in revenues and saw decreased expenses for a variety of reasons, including increased accessibility to federal programming for COVID-19, the release said. 

Provincial tax revenues came in $76 million higher than budgeted, including income tax revenues that were $52 million over budget.

Personal and corporate income taxes were pushed up "by the high participation rates in federal programming supports for Canadians throughout the COVID-19 pandemic," the release said.

Meanwhile program spending came in $105 million lower than anticipated.

The latest estimate for the 2021-22 budget is a $112 million deficit, projected in March 2021. A three-year plan presented with the budget at that time projected the annual deficit falling to $27.9 million by 2023-24.

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