Sask. finance minister says $1B surplus projection cut in half

Saskatchewan's Minister of Finance Donna Harpauer says the provincehas cut its projection for a $1-billion surplus in half due to a more-than-$500-million drop in non-renewable resource revenues.

Harpauer provided a first-quarter update in Saskatoon on Tuesday.

"The forecast clearly demonstrates the need to be prudent and manage spending carefully, as resource revenue is volatile and forecasts can change quickly due to global impacts on prices and production."

The government's revenue is now projected to be $19.6 billion, down $123.7 millionor 0.6 per centfrom March's budget.

Non-renewable resourcerevenueprojections are down by $528.9 milliondue to lower potash and oil prices, and lower sales forecasts.

The government said revenue decreases in non-renewables are offset by $405.2 million in increases in other revenue categories, most notably taxation, which saw an increase of $150 million in PST revenue from the budget.

Expenses are forecast to increase by $408.2 million, 2.2 per cent higher than the budget projection. The government has attributed much of that to a $268.5-millionincrease in pension expenses resulting from actuarial adjustments to the Saskatchewan Teachers Superannuation Plan. Included in that are forecast increases to salaries and benefits, and other spending.

Another expense increase was$89 million for evacuation, wildfire fighting costs and Provincial Disaster Assistance Program claims.

Gross debt is now forecast to increase to $30.9 billion, a $61.2 million increase from budget.

Harpauer said that despite the drop in revenue, the government is not moving away from paying down operating debt.

"Sticking with our debt reduction plan is important, because paying down up to $1 billion in operating debt this fiscal year, combined with $1.5 billion in debt retirement last fiscal year, is resulting in projected annualized interest savings of $110 million savings that go directly into supporting priority programs, services and infrastructure for Saskatchewan people," Harpauer said.

Harpauer said that with just a few months of data, it is too early to determine what impacts drought will have, but said crop insurance will be a "pressure."

An upcoming new teacher's contract will also add to the province's expenses.

"We do not budget for the teachers wages and they're in a collective bargaining right now. So when that is settled, we'll have that expense come in and hopefully that can be settled and you'll see that reflected in the second quarter."

As for a potential tax or PST cut in the spring budget, Harpauer said it's too early to say.

"We're better able to make those decisions closer to year-end, because it's been rather volatile with turmoil in Europe and disruptions in the supply chain, and that has made predictions more difficult. I wouldn't predict what we were able to do in the next budget until we have more data to work with in this one."

Opposition says government not helping with cost of living

NDP Opposition finance critic Trent Wotherspoon said the government should have announced some sort of cost-of-living relief such as a PST reduction, fuel tax cut or lower power rates.

"The Sask. Party's failure to deliver cost-of-living relief to cash-strapped families and instead hike costs and taxes is inexcusable," Wotherspoon said.

"Saskatchewan people have been taking the rising cost of gas, groceries, additional PST and power bills square on the chin for months, while government coffers have been filled with windfall revenues and additional PST."

Wotherspoon said the $150 million increase in PST revenue in the financial update shows Saskatchewan people are paying.

"The Sask. Party has done worse than nothing while sitting on windfall revenues. They've hiked taxes and fees and power bills more than three times in the last year."