Sask. budget: Record $2.6B deficit projected, no balanced budget until 2026-27
‘Deficit larger than anticipated’ due to COVID-19, finance minister says
The Saskatchewan government's 2021-22 budget forecasts a record deficit of $2.6 billion and projects that the province won't see a balanced budget until 2026-27.
The budget forecasts $14.5 billion in revenues, up 6.1 per cent from 2020-21, and $17.1 billion in expenditures, up 6.3 per cent from 2020-21.
The debt is forecasted to reach $27.8 billion by next March, an increase of $4.2 billion.
Finance Minister Donna Harpauer called the fallout from COVID-19 "the biggest shock to the Saskatchewan, Canadian, and world economies since the Second World War."
"This is a significant challenge that requires a significant response," Harpauer said Tuesday.
"As a result, this year's deficit will be larger and it will take longer to return to balance than we had anticipated. But we are going to make the investments needed now to protect Saskatchewan people through the end of the pandemic and to drive a strong economic recovery as we emerge."
Harpauer said the predictions and projections in the budget are based on the vaccine rollout "going as planned," which means a majority of residents getting vaccinated by September or sooner.
Harpauer said the province is responding to the health and financial crisis by spending record amounts in health, education, social services, and protection of people and property.
During the provincial election campaign last fall, the Saskatchewan Party made $849 million in spending promises, with an additional $7.5 billion planned for capital projects over the next two years.
A host of platform promises and projects previously announced are included in the 2021-22 budget.
Harpauer said every election promise has been kept in the 2021-22 budget, with the exception of a pledge to return to balance by 2024.
Health expenditures for 2021-22 are set at $6.54 billion. This is an increase of $359 million, or 5.8 per cent, from the previous year.
The government said $90 million of the increase is directed toward COVID-19 response, including the mass vaccination rollout, personal protective equipment, lab capacity and physician costs.
The Saskatchewan Health Authority's budget will increase by $221 million, or six per cent.
The province also allocated $6 million for the hiring of 100 continuing care aides to help long-term care residents.
Mental health and addictions will see $458 million in funding, an increase of $23.4 million. Mental health and addictions account for 7.5 per cent of the overall health budget. In 2019, mental health and addiction spending made up 6.3 per cent of the health budget.
A trio of election platform items made their way into health portion of the budget:
- $6 million to expand the Autism Spectrum Disorder program for ages six to 11.
- $5 million to expand an insulin pump program and glucose monitoring for those under 18.
- Ambulance fees for seniors will be reduced to $135 per trip from $275.
The province is also spending $1.4 million for STARS air ambulance to buy a new helicopter.
The government will spend $3.75 billion on education, which includes pre-K to 12, post-secondary and career training. This portion of the budget has increased by $391 million, or 11.6 per cent.
The province's 27 Pre-K to 12 school divisions will see $1.96 billion in funding for next year, an increase of $19.2 million. That increase includes a two per cent salary increase for teachers that was part of the recent collective agreement.
Education spending includes money to create 176 new licensed home-based child-care spaces and 51 new licensed centre spaces.
The overall increase to post-secondary funding is 4.4 per cent from last year, or $28.4 million.
The government said it is providing "a significant multi-year investment to help grow the long-term financial sustainability of post-secondary institutions."
This includes an additional $60 million over the next two budget years for "COVID-19 recovery" and other "shared priorities."
Social services spending is increasing by 4.5 per cent to $1.56 billion in 2021-22.
The social services' budget includes:
- A $19-million increase to Saskatchewan Assured Income for Disability (SAID) program.
- $3.5 million more for the Seniors Income Plan.
- A $4.2-million increase for third-party providers working with people with intellectual disabilities and $2.5 million for those working with at-risk children and youth.
The province said it has committed to $1.5 billion in pandemic spending for 2021-22.
This includes the $90-million health sector response, $20.7 million for Saskatchewan schools and $6.8 million for the Northern isolation program.
The government also lists several economic supports as "COVID-19 supports":
- $488 million in capital spending.
- $285 million for SGI rebate.
- $200 million to clean up inactive oil wells.
- $174 million SaskPower rebate.
- $66 million home renovation tax credit.
- $64 million small business tax reduction.
NDP says budget does not meet pandemic needs
The Opposition NDP said the budget does not address immediate needs in education, child care and long-term care.
"There is no jobs plan in this budget," said NDP finance critic Trent Wotherspoon.
NDP Leader Ryan Meili said the government's financial plan includes "half measures" and does not do enough to support those affected by the pandemic.
Meili called it an "uninspiring budget."
"What I am frustrated about, animated about, damn right pissed-off about, is what is going on in this province. Scott Moe has failed Saskatchewan when it comes to COVID-19 and as a result has damaged our economy and resulted in people losing their lives."
Meili said the NDP would have different "priorities" and would have spent the money the government is choosing to spend in different areas.
The government is committing $3.1 billion to capital spending, including:
- LTC facilities in Grenfell and La Ronge, and planning for facilities in Estevan, Watson and Regina.
- Planning for Weyburn and Prince Albert hospitals and urgent care centres in Regina and Saskatoon.
- $101.9 million to build 16 new schools and renovate five.
- $52 million for a remand centre in Saskatoon.
- $18.9 million for Phase 1 of the Lake Diefenbaker irrigation project.
The government is forecasting deficits for the next five budgets. Here's the breakdown:
- $1.7 billion in 2022-23.
- $1.2 billion in 2023-24.
- $770 million in 2024-25.
- No projection provided for 2025-26.
- A balanced budget in 2026-27.
Harpauer said the road back to a balance does not need to include tax increases.
"We don't anticipate tax hikes going forward," Harpauer said.
When asked about paying down the debt, Harapuer said "there will come a time when we can start working on the debt."
She said the "debt of concern" is the operating debt of the province.
Harpauer said non-renewable resource revenue accounts for nine per cent of government revenue, more than half of what it was a decade ago.
The province based the number's in Tuesday's budget on the following predictions:
- Real GDP — an increase of 3.4 per cent after a decrease of 4.2 per cent in 2020.
- WTI Oil price — $54.33 US/barrel.
- Potash — $191 US/KCI tonne.
- Canadian dollar — $0.79 U.S.
- Retail Sales — an increase of 3.2 per cent.
There are two tax changes to note. As of September 2021, the government is adding a Vapour Products Tax (VPT) with a rate of 20 per cent on the retail price of all vapour liquids, products and devices.
It will also add an annual $150 tax for passenger electric vehicles. The government said the number of electric vehicles in the province is "relatively low" but said, "they are not contributing to highway maintenance through the provincial Fuel Tax."
The electric vehicle tax will take effect Oct. 1, 2021.
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