In an unexpected turn of events, the Saskatchewan government has significantly reduced its anticipated billion-dollar surplus projection in a recent first-quarter fiscal update. This revised outlook comes on the heels of originally optimistic projections earlier this year, when robust revenues from resource-related fields led to expectations of a lofty surplus.
However, the province stated on Thursday that they are forecasting a decrease in surplus by $532 million. This provisional reduction has been necessitated by budgeting for pension-related expenses and the fiscal demands of an unusually hectic wildfire season.
Despite this financial readjustment, Finance Minister Donna Harpauer reassured in a news conference in Saskatoon that the province’s finances remain solid. Harpauer emphasized the volatility of resource-based revenue and the potential for rapid changes in predictions due to global price and production fluctuations. Consequently, she stressed the importance of careful spending management.
The revised projections were impacted by a steep decline in funds accrued from the non-renewable resource sector, amounting to approximately $529 million. Simultaneously, the province reported this financial dip was significantly compensated by a $405 million increase in other revenues, including revenue from Provincial Sales Tax (PST).
In spite of these setbacks, Saskatchewan’s government remains committed to its debt repayment plan, notably to pay off $1 billion worth of debt. Harpauer stated that higher opening cash balances due to a strong year-end for the fiscal year 2022-23 will serve to offset the decrease in projected surplus.
Furthermore, she pointed out that this steadfast adherence to debt reduction will result in considerable savings. It is anticipated that this crusade against provincial debt will save the province $110 million annually in interest payments.
In regards to debt-to-revenue ratio, the province’s government ranks as the second-best among provinces, added Harpauer.
However, the revised fiscal update was not without its critics. Finance critic and Saskatchewan NDP MLA Trent Wotherspoon accused the government of distorting its financial record, faulted them for the scarcity of affordability measures in the report, and expressed concern over recent PST increases.
Wotherspoon chided the province’s government for denying the economic reality of Saskatchewan’s citizens and shifting additional costs onto them. He highlighted an additional $150 million in PST revealed in the report and blamed the Sask Party for hiking taxes and fees amidst burgeoning revenues. Wotherspoon criticized the government for not only failing to alleviate these costs but also for increasing them three times over the past year.