Sask. now projects $1B deficit for 2016-17

A mid-year financial update released Tuesday shows deficit much higher than the $434 million projected in the spring.

Finance Minister Kevin Doherty says province must get labour costs under control

Saskatchewan Finance Minister Kevin Doherty listens to a reporter's question about the mid-year financial report, which projects a $1-billion deficit for 2016-2017. (CBC) (CBC)

Saskatchewan has a $1-billion deficit, more than double what had been projected in the June budget.

The figure, released Tuesday as part of a mid-year financial update, includes $236 million related to a repayment to businesses from a surplus at the Workers' Compensation Board.

Without that, the deficit is $806 million — the figure Finance Minister Kevin Doherty referenced on Monday.

Either way, it is much higher than the $434-million deficit that had been projected in the summer.

"To start moving the provincial budget back to balance, significant measures are needed — with more to follow in next year's budget," Doherty told reporters. 

Since the June budget, the province's projection is that it will take in $400 million less in taxes than expected.

Meanwhile, money from oil and potash continues to tank: Non-renewable resource revenue fell $180 million since the spring.

Spending cuts needed

The Opposition's finance critic says the government should have seen this coming. New Democrat MLA Cathy Sproule notes the budget, delivered in June due to the spring election, was not that long ago.

"I mean this is only four months later and [the deficit is] more than double," she said. "Secondly, we've lost 11,000 jobs in this province right now and what they're doing is cutting in job training programs ... and that is the wrong way to go."

The Opposition's finance critic Cathy Sproule says the government should have seen a bigger deficit coming months ago. (CBC )

In order to cope with the deficit, the government says it is cutting back internally.

"We have to take strong measures on the spending side to ensure we can get that back to balance over a period of time," Doherty said. 

"At the same time, when your economy's going through some challenges, you don't want to further shock your economy by laying off literally hundreds of teachers, or hundreds of nurses or hundreds of social workers or hundreds of government workers," Doherty said.

"That's what we're dealing with."

Hiring freeze in effect

The government will try to save $217 million before the spring, through a hiring freeze and other restraint measures.

Doherty said public sector salaries across government are about $6.3 billion. He said labour costs must be curtailed to get spending under control.

"This won't be easy," he said. "But workers in the energy and mining sectors and people working in areas that serve those sectors have been hit hard by the downturn."

"Government itself must show leadership by asking those working in the public sector to help our finances become more sustainable," Doherty said.

In response to questions from reporters, Doherty said government MLAs would be willing to take a wage freeze themselves next spring. He said there was no talk about making that retroactive for this year's increase. 

Tax increase possible

When asked, Doherty said his officials are looking at possible tax increases, changes to existing tax exemptions or even new taxes on things that aren't currently taxed.

"All of those things are on the table," he said.

He ruled out the federal carbon tax, however.

"We think it's an unfair tax," he said.

The larger deficit announced today will require $500 million in borrowing to cover government operations, the government said.

The changes mean the public debt at the end of current fiscal year is projected to hit $15.2 billion — $448 million higher than was projected in the spring. 

The prairie director of the Canadian Taxpayers' Federation, Todd MacKay, says the government needs to stop borrowing to make ends meet. (CBC)

That drew the attention of the Prairie director of the Canadian Taxpayers' Federation, Todd MacKay, who said the government should be cutting spending rather than piling up debt.

"It's not a good idea to be borrowing," he said. "This government does have some track record of significant debt repayment in the past. It's time to get back to that," MacKay told reporters.