Deficit of $2.6 billion expected, Saskatchewan expects to balance budget in 2026-27

Regina – Prior to the onset of the global pandemic of COVID-19 in the spring of 2020, the Saskatchewan Party Government had been aiming towards once again running balanced budgets. But the pandemic has now delayed that goal for a total of six years, with a balanced budget not expected until 2026-27 at the earliest.

The Saskatchewan provincial budget, tabled by Minister of Finance Donna Harpauer on April 6, has a forecast deficit of $2.6 billion for this year.

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And that, she told reporters, is “pretty frustrating.”

“I do you think that we were there for the people of Saskatchewan. We need to be there Saskatchewan. We need to also plan for growth and for the days where we will again be leading the nation in growth that we did in the past. And I think we have the right budget to do that.

“But we are borrowing.”

That wasn’t the initial plan, before the pandemic hit. Harpauer said, “In my pre-COVID budget that never happened, I was actually paying down debt.”

The reason for deficit is simple: the pandemic. Harpauer said, “It is difficult to overstate the impact of the pandemic. It was not only a worldwide health crisis, the COVID 19 pandemic is also the largest shot to the Saskatchewan, Canadian and world economy of any event since the Second World War.

“It is a once in a lifetime challenge that requires a significant response. As a result, this year's deficit will be larger and it will take longer to return to balance than we had anticipated.”

The 2021-22 budget forecasts diminishing deficits in the following years, with $1.7 billion in 2022-23, $1.2 billion in 2023-24, and $770 million in 2024-25. A return to balance is expected in 2026-27, according to Harpauer.

Revenue for this year is forecast at $14.5 billion in this budget, with most revenue categories forecast to increase compared to the latest 2020-21 forecast. Expenses of $17.1 billion are projected in this budget, an increase of about $1.0 billion compared to last year. That’s a 6.3 per cent increase in spending from last year’s budget.

Total public debt, including Crown corporation debt, is projected to increase $4.2 billion to $27.8 billion by March 31, 2022.

The budget forecast’s Saskatchewan’s real GDP will grow 3.4 per cent in 2021, but that’s after a projected 4.2 per cent contraction in 2020, meaning the plan to recover will take longer than expected. This fiscal challenge will be managed carefully, the budget says, “without reckless cuts or large tax increases that would threaten both the pandemic response and a strong recovery.”

Saskatchewan’s nominal and real GDP is not expected to reach pre-pandemic levels until 2022.

The budget hit on three themes: Protect. Build. Grow.

Pandemic response

A total of $4.8 billion is expected to be spend on pandemic response over the course of several years. After spending $2 billion in the 2020-21 fiscal year on the response to the COVID-19 pandemic, another $1.5 billion is expected to be spent in this budget, and another $1.3 billion over the next two years. Combined health spending up is 5.8 per cent, or $359 million, to a total of $6.54 billion.

Of that, $90 million is for the mass vaccine rollout, purchase of more personal protective equipment, contact tracing, physician costs and expansion of testing and assessment sites. The provincial laboratory will also see added capacity.

Urgent care centres in Regina and Saskatoon will see $5.7 million.

Mental health and additions programs will see a record $458 million, up $23.4 million or 5.4 per cent. There will be 12 additional provincial addiction treatment beds, plus two pre-term treatment beds for the addiction treatment centre in Estevan.

Transportation will see $553.2 million in capital spending. This includes twinning Highway 3 west of Prince Albert, and multiple passing lanes projects on Highways 2, 3, 5, 6, 12, 14, 16 and 39.

Education will get $189.9 for capital projects, including $101.9 million for 21 ongoing capital projects building 16 new schools and renovating five. There will be changes to education property tax mill rates that will increase provincial revenue available for pre-K to Grade 12 in line with inflation.

Saskatchewan Party campaign promises from the fall election were noteworthy as new spending. “There was 14 of them. We kept 14 of those,” Harpauer said Approximately 100 continuing care aides will be hired as well, the first year in a three-year plan to hire 300. There $6 million for autism support, $5 million for insulin pumps as well as continuous glucose monitoring for kids under 18.

Seniors ambulance fees are maxed out at $135, down from $275. Regina and Saskatoon will see a $6.6 million for additional ambulances to address patient transfer delays, wait times, and a new computer dispatch system. STARS will see $1.4 million towards a new helicopter.

The “Saskatchewan Economic Recovery Rebate” reducing electricity bills by 10 per cent will cost $174.8 million, and there is a $285 million SGI Auto Fund Recovery Rebate.

While last summer the government announced an ambitious $4 billion Lake Diefenbaker Irrigation Westside Expansion Project, this year Phase 1 of that project is allocated $18.9 million.

Some activities that have so-far skirted targeted taxation are under the microscope, under the term “tax fairness.” Vapour and heat-not-burn tobacco products will both be taxed. While people pumping gas in their vehicles pay provincial taxes on the fuel for road use, “This budget will introduce a road use fee for electric vehicles at the time of registration.”

Those electric vehicles will be charged $150 per year when they are registered, based on the equivalent of a gas vehicle using 10 litres per 100 kilometres, and 10,000 kilometres per year. There are only 403 electric vehicles registered in Saskatchewan, so the total amount is expected to be about $60,000.

Saskatchewan will open an additional four trade and investment offices abroad, in addition to four already in place.

The budget forecasts the average price of West Texas Intermediate oil to be $54.33 for 2021-22, an improvement from the 2020-21 forecast of $42.27. Oil production is budgeted to come in at 160 million barrels, an improvement from 154 million barrels forecast for last year. There will be $3.8 million in royalty relief for oil and gas producers to invest in methane reduction projects. There will also be a modernization and expansion of the High Water Cut Program to make wells more viable for producers.

Potash is budgeted to netback US$191 per tonne for KCL, and C$396 per tone for K2O. Potash sales are budgeted at 14.3 million tonnes, a slight improvement over last year and notably higher than the 12.7 million tonnes in 2019-20.

The Canadian dollar is budgeted at 79.12 U.S. cents.

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