P.E.I. to cut budget by 3%

The province of P.E.I. will have to cut its budget in response to cuts from the federal government, Premier Robert Ghiz said in his state of the province address Monday night.

'If a service no longer addresses the general needs of the Island then it may be discontinued.' Premier Robert Ghiz

Ghiz addressed a crowd of more than 200 people at the Delta Prince Edward for his fifth state of the province address.

Ghiz said while cuts are coming, his government would ensure economic security.

"Let me underline this in the simplest of possible terms. We're going to reduce spending by three per cent in the coming year. We're going to reallign our government and we're going to protect our island's economic security," he said.

The reduction in spending is a direct response to cutbacks in federal contributions to P.E.I., said Ghiz. He outlined how there's been a steady decline in provincial equalization pay. He also noted Ottawa plans to reallocate health transfers on a per capita basis by 2014, meaning less money will be given for health care on P.E.I.

The coming cuts mean most provincial programs are under review.

"We have to adjust our expectations," he said.

"If a program is offered by government that truly meets the public's needs, then it will be maintained, but nothing more. If a service no longer addresses the general needs of the Island, and serves only to perpetuate itself, then it may be discontinued."

The only department that will see any increase in spending this year is health, said Ghiz. The budget for education will stay the same.

Ghiz said these cuts will hopefully help balance the province's books. P.E.I.'s expected deficit for 2011-2012 is at almost $73 million.