Saskatchewan budget projects $34M surplus

Harpauer said a wide array of potential vulnerabilities keep her up at night, however, she highlighted how the government has managed fluctuations before.

“Should there be something that goes south, that is what we are going to have to do again,” she said. “We are going to have to dig deep and find savings to backfill any of the expenditures that don’t come in as we anticipate.”

The 2019-20 budget is branded as the “right balance,” and the minister said for the average resident, a balanced ledger means the government has flexibility going forward to make more targeted investments.

“We need to pick priorities each and every year and have the balance and the flexibility through that in order to focus on priorities,” she said, adding it is also a boon for the economy as investors look for stable jurisdictions to direct money and create jobs.

Expenses are forecasted at $14.99 billion, up 2.6 per cent over 2018-19 levels, and the highest since fiscal 2015-16. Nearly every department is on the receiving end of a funding bump, and the budget boasts massive investments in mental health treatment. There are no new taxes or tax increases in the budget.

Three budgets ago, the government opted to increase the provincial sales tax and expand its application. Asked why they choose to make targeted investments over tax relief with the money, the minister pointed to the importance of making investments in the future.

“We have heard a lot over the last couple of years of the need for more services for mental health and addictions,” she said. “We just felt that was [an] important investment for the children and future of the province.”

Government debt is forecast to come in at $21.7 billion as of March 31, 2020, up $1.8 billion from the third quarter update and $1.7 billion over last year’s budget, which the province said is due to further capital investment.

At the end of the third quarter, Saskatchewan’s deficit is projected at $379.9 million, which is depressed $31.6 million from mid-year due to $51.3 million in lower revenues, but is partially offset by a $19.7 million drop in expenses. Revenue in 2018-19 is up $86 million from budget and expenses are up $101.4 million.

Public debt is forecasted to continue to rise to $23.1 billion in 2021, $24.6 billion in 2022, and $26 billion in 2023. This equates to a debt-to-GDP ratio of 24.1 per cent this year, 25.8 in 2020 and 26.5 in 2021.

Net debt is on pace to be $12.1 billion by March 31, the third lowest among provinces at 14.8 per cent of GDP, bested only by Alberta and British Columbia at 8.2 and 14.6 per cent, respectively.

The province’s operating debt is forecast to remain unchanged at $6.15 billion.

The minister said the province needs to remain cognizant of the debt-to-GDP ratio, but Harpauer said if the province’s economy remains strong alongside the credit rating, it remains manageable.

GDP is expected to grow by one per cent in 2018, 1.2 per cent in 2019 and 2.4 in 2020. The suspension of operations indefinitely at the McArthur River Uranium mine continues to weigh on the outlook.

Non-renewable resource revenue is budgeted at $1.8 billion — up almost entirely on the back of potash — and accounts for 12 per cent of total revenue. This is up from 10 per cent last year, but well below the high of 32 per cent.

While the oil sector continues to lag in Saskatchewan, potash and agriculture remain strong. Oil production is expected to continue to decline this year, but come 2020, the province expects the economy to return to a more “normal” position as oil prices increase alongside investment.

The province is budgeting oil at US$59.75 per barrel and potash at US$221 per KCI tonne. Oil and natural gas revenues are pegged at just $691 million, down $2 million from the 2018-19 forecast. A US$1 change in oil prices can push or pull revenue projections by $15 million and a $10 per KCI tonne swing can move the needle by $54 million. New pipeline capacity which could come online down the road is not assumed.

Housing starts in the province fell by 26.4 per cent in 2018, while non-residential fell by 9.6. Building permits were down 16.7 per cent last year. PST was expanded to construction projects in 2017.While there are no plans to remove it, Harpauer said each year the government reviews its revenue tools and said as more money comes in, decisions will be made on how to proceed.

What’s New

The new budget provides $12 million to start building a new long-term care facility in Meadow Lake to replace the Northland Pioneers Lodge. Capacity will be increased from 55 to 72 beds. Construction is expected to begin in the spring of 2020.

Meadow Lake will also receive $700,000 in new funding to support the creation of a satellite dialysis service.

There is $2.5 million to advance the pre-construction design of a new Victoria Hospital in Prince Albert and plans to work with the Ottawa to secure federal funding.

New funding of $558,000 will support the creation of a provincial organ donor registry across the province. Work will commence immediately, with the goal of launching a registry before the end of the fiscal year.

Last year, the Humboldt Broncos bus collision brought into focus the importance of safety and volunteer first responders.

The budget introduces a new non-refundable tax credit for volunteer firefighters and volunteer emergency medical first responders in the 2020 tax year. Those performing at least 200 hours of eligible volunteer services for a year will be able to claim a $3,000 tax credit. The income tax system already provides a $1,000 exemption for honoraria that a volunteer might receive. If all 7,700 eligible people applied, it would impact the budget by around $2.5 million.

While this was an election promise, the government said they did not have the financial capacity to accomodate the program until now.

But the minister said the collision renewed how extremely important the volunteers in rural areas are in Saskatchewan.

“I think [the Humboldt Broncos collision] renewed our gratitude. We have always been grateful but sometimes we forget,” she said.

The budget also sets aside $65 million over five years for a new Enhanced Intersection Safety Program. Adding in $7 million from the current Safety Improvement Program, around $20 million will be provided for specific safety improvements this year. Projects this year include pedestrian crosswalk improvements on Highway 55 at Flying Dust First Nation and constructing a guardrail on Highway 376 at Maymont Bridge.

The province is tweaking the Potash Production Tax to eliminate credits for Crown and freehold royalties. Potash prices are expected to increase 6.6 per cent in 2019 and the change, according to the province, will ensure a more stable and strong return. This will add $117 million to provincial coffers from potash revenues, which is calculated into this year’s budget.

Highlights

Health – $5.89 billion, up 2.1 per cent

Targeted spending on mental health and addictions takes centre stage in the budget, increasing by $29.8 million to $402 million. This includes $13.7 million to mainly support doctors and nurses at the Saskatchewan Hospital North Battleford.

Nearly $8.4 million will fund over 140 new support beds across the province. There is also $1.6 million to launch three Rapid Access to Addiction Medicine (RAAM) clinics in Regina, Saskatoon and Prince Albert.

Around $300,000 in new funding will help provide 24-7 nursing supports at the La Ronge Detox Centre. This funding will significantly improve the centre’s ability to provide treatment to individuals detoxing from opioids, crystal meth or other substances.

There is $250,000 to expand the Mental Health Commission of Canada’s Roots of Hope Suicide Prevention Initiative to Buffalo Narrows, the third Saskatchewan community incorporated into this program.

Up by $668,000 to $1.1 million is funding for the Alzheimer Society’s First Link program, which helps those recently diagnosed with dementia get help as soon as possible.

Education – $3.28 billion, up $19.2 million

The province’s 27 school divisions will receive $1.9 billion to operate in 2019-20, up $26.2 million over last year’s budget. There is no change in education property taxes.

Money has been set aside to advance school projects in Regina, Moose Jaw and Saskatoon, as well as funding for new schools in Rosthern and Weyburn this fiscal year.

Saskatchewan’s public libraries will even receive increased funding, with a one per cent lift to increase total funding to $11.2 million.

Social Services – $1.43 billion, up 3.7 per cent

Foster families will be eligible for monthly payments once they complete training to better their caregiving skills.

The Autism Spectrum Disorder program introduced in 2018 will increase by $700,000, as the amount parents can access for the services their children need grows from $4,000 to $6,000.

Policing – $701.1 million, up 1.6 per cent

There is $7.2 million tagged for operations in the correctional component of the SHNB. Over $1 million will go toward a new gang violence reduction strategy in the province.

More than $8.5 million is being invested in the correctional system to increase security, reduce contraband coming in and increase the number of beds for young offenders.

There is $1.05 million for the ministry’s contraband reduction initiative, including a new body scanner at the Prince Albert Correctional Centre.

Environment – $263.9 million, up 4.8 per cent

The budget sees $9.252 million being used to begin the purchase of an air tanker. The firefighting aircraft will replace the province’s one remaining piston tanker, at a cost of over $37 million over the years. It is expected to join the fleet in 2022.

Revenue sharing

There will be $251 million earmarked for Municipal Revenue Sharing, a $10.5 million increase over last year. The new formula, which was announced by Premier Scott Moe at the Saskatchewan Urban Municipalities Association in February, is now based on three-quarters of one per cent of PST from two years prior.

A total of $437.1 million in funding will go to support municipalities, up from $412 million last year.

Agriculture

Funding to the rat control component of the Pest Biosecurity Program introduced last year will increase by $350,000 to $1.25 million.

This money will be in the form of grants to rural municipalities and First Nation bands, to cover the cost incurred for rat inspections and bait.

Carbon Tax

There is no specific modelling for the impact of carbon tax on this specific budget. The federal government imposed a backstop in Saskatchewan, set to kick-in April 1. Schools, hospitals, and other institutions will receive funding to accomodate the cost of increased carbon tax in terms of their fuel charges. Details on this are still pending.

Cannabis

A total of $5 million of new revenue from cannabis is included in the budget. There is no model on how this will eventually flow down to the municipal level as data is limited and the province is being conservative in its estimates.

—

tyler.marr@jpbg.ca

On Twitter: @JournoMarr

by Tyler Marr

Saskatchewan budget projects $34M surplus

What’s New

Highlights

What's Trending