The 2016 budget was expected to contain red ink, and it did.
The first budget of new Finance Minister Kevin Doherty, delivered Wednesday in the legislature, includes a projected deficit of about $434 million in 2016-17.
The budget forecasts total revenue of $14.02 billion, 1.8 per cent lower than last year, and total expenses of $14.46 billion, up 2 per cent.
GDP is forecast to decline by .6 per cent this year, but a return to growth of 2.5 per cent is foreseen for 2017.
There are no tax increases and no new taxes.
“We have prepared a budget that will keep Saskatchewan strong by keeping taxes low, controlling operational spending, and by continuing to make key investments in government services and infrastructure,” Doherty said to reporters in a conference call prior to the budget being delivered in the legislature in the afternoon.
Getting a large measure of blame for the deficit number is an estimated $968 million drop in non-renewable resource revenue.
The decision was made to run a deficit as opposed to making cuts to programs.
“There are years when unforeseen events — drops in the price of oil or potash, or costly natural disasters — make it prudent to run a manageable deficit rather than implement severe cuts to programs and services or increase taxes,” said Doherty.
“This is one of those years.”
Because the government is running a deficit it will be running afoul of its own Growth and Financial Security Act by running deficits two years in a row. Doherty indicated new legislation will be introduced this session to repeal that existing act, which he said pertains mainly to the General Revenue Fund.
The finance minister indicated he expected things would turn around.
“We will help Saskatchewan through a difficult year, before the economic recovery expected next year. And we remain committed to return to balanced budgets in 2018,” Doherty said.
As expected, Doherty's budget was a launch pad for some major changes in the way the province delivers services.
This budget will begin what he described as a “government-wide process of transformational change.”
“Our goal is to ensure the sustainability of high-quality government services delivered at the most sustainable and cost-effective manner as possible.”
As part of this, according to the finance minister, the government plans to examine whether services or programs are the role of government, are being delivered in the best possible manner at the lowest possible cost to taxpayers, whether multiple programs could be combined into one that provides better results at less cost and whether a different governance model could provide administrative savings while still remaining responsive to the needs of Saskatchewan people.
In speaking to reporters, Doherty made clear "tranformational change" does not refer to selling off the Crowns such as SaskTel or SaskPower.
Doherty added there will also be a deep look at Saskatchewan's revenues. The province intends to look at its revenue sources to make sure government revenues are sustainable into the future and guard against too much dependence on oil and potash.
“That includes a tax system that is competitive, simple and fair for all Saskatchewan taxpayers. Those would be the principles of any change to our tax system.”
The decrease in total revenue is offset somewhat by higher own-source revenue, including expected net revenue of $148 million of agricultural land sales this fiscal year. Net income from government business enterprises is also up by about $180 million, largely due to better net income forecasts for nearly all commercial Crowns.
Among the transformational changes mentioned in the budget is restructuring of the way health regions are set up. In a news release, Health Minister Dustin Duncan announced a special commissioner will be appointed to recommend options for fewer health regions and more effective and efficient delivery of province-wide services.
The name of the commissioner will be announced in the coming days.
In the meantime, regional health authorities will receive $3.4 billion for operating funding, an increase of 2.3 per cent over funding provided to RHAs last year, and a 56 per cent increase since 2007. Included is $20 million in additional funding to reduce surgical wait times.
There are a number of highlights to the budget. Investments include the following:
Total spending for health is projected at $5.6 billion, up $81 million or 1.5 per cent compared to last year. Health administration expenses are being reduced by $7.5 million, with that money being re-invested in frontline staff in long-term care homes.
The province says the funding will improve access to care and reduce wait times for surgery and diagnostic services. Regional health authorities will also be receiving nearly $3.4 billion for operating and targeted funding, up 2.3 per cent compared to last year.
There will also be a $20 million funding boost to the Saskatchewan Surgical Initiative, which Doherty says will “ensure the shortest surgical wait times in Canada.” About $8 million in targeted investments are to go towards diagnostic services in the province.
There will also be increases of almost $10 million to the Saskatchewan Cancer Agency to cover 15 new cancer drugs, and $15 million to add the drugs for Hepatitis-C to the drug plan as well as to increase utilization of the plan.
In education, there will be $3.7 billion in total spending with investments in Pre-K to Grade 12 and post-secondary education, student supports and job skills training.
Kindergarten to Grade 12 school operating funding is almost $1.9 billion, up $16.6 million or about one per cent.
A total of 810 new licensed childcare spaces will be developed at the new P3 joint-use schools in Saskatoon, Regina, Warman and Martensville. Those will be available in 2017 when those schools open.
Funding of $1.6 million is going to 199 previously approved childcare spaces that are coming available this year.
Support for post-secondary institutions includes $475 million for the Universities of Saskatchewan and Regina and their affiliated and federated colleges, $156 million for Saskatchewan Polytechnic, the Saskatchewan Indian Institute of Technologies and Gabriel Dumont Institute and $29 million for Saskatchewan’s regional colleges, for a total $660 million, in line with last year.
More than $53 million in direct support to students includes $32.5 million for the Student Aid Fund to provide student grants, bursaries and loans; more than $14 million for scholarships, including the Saskatchewan Advantage Scholarship and $6.5 million for the Saskatchewan Advantage Grant for Education Savings.
The budget includes $494 million for income assistance programs that support more than 30,000 individuals and families.
For municipalities, the province is maintaining its commitment to provide one per cent of the provincial sales tax in revenue sharing. The government’s revenue sharing with municipalities will be almost $272 million, up $6.4 million over 2015 and up $144 million, or more than 113 per cent, since 2007.
The Ministry of Agriculture will see an increase in funding. It is going up 7.5 per cent, to a total of nearly $390 million. This will include over $254 million to fund agricultural business risk management programs such as AgriStability, AgriInvest and Crop Insurance, up $14.6 million from last year.
The budget makes a hefty commitment to infrastructure.
More than $3.5 billion has been set aside, touted by Doherty as “the largest single-year capital investment in the province’s history.” Nearly $1.8 billion will be invested by Saskatchewan’s commercial Crowns and more than $1.7 billion by executive government ministries and agencies.
For the first time in history, the government’s investment into highways and transportation infrastructure will top $1 billion this year.
More than 1,300 kilometres of highways will be repaired or upgraded this year including many rural highways. A number of 2016-17 projects include: $13.5 million for the interchanges at Warman and Martensville; · $12.3 million for Highway 55 improvements; $8.9 million for twinning on Highway 7 from Saskatoon to Delisle; $8.1 million for twinning Highway 39 from Estevan to Bienfait; and $1.3 million for continued planning for Highway 6 and 39 twinning and passing lanes from Regina to Estevan.
Work continues on the Regina Bypass, construction will begin on new overpasses in Warman and Martensville, and $10 million is set aside as the first year’s commitment towards the North Commuter Parkway Bridge project in Saskatoon.
The budget provides more than $391 million to K to 12 schools and other education capital, up $143 million from last year. Of that, $26 million will go to advanced education and training, with an estimated $170 million to be provided to this sector over the next four years.
Health care infrastructure remains a high priority and there is a $700 million investment commitment over four years.
Construction will continue on major projects including the Children’s Hospital in Saskatoon, and importantly to this region, the new Saskatchewan Hospital and integrated correctional facility in North Battleford. Construction commenced on the Sask. Hospital project last fall.
Not unexpectedly, there were some tough decisions on a number of items in the budget.
Among them: effective immediately, fees for the Children’s and Seniors Drug Plans are rising by $5 per prescription, for a maximum of $25 per prescription. According to Doherty, the change makes the plans more sustainable.
Another piece of bad news concerns the Buffalo Narrows Community Correctional Centre, which will be closed. It houses 18 inmates at full capacity and they will be transferred to other facilities. That closure is expected to save $661,000 this year and $1 million annually.
Justice and corrections programs, including the Aboriginal Courtworker Program, funding to aboriginal police consulting groups, the special investigations unit grant and alternative measures programming, will be taking a hit. Funding for these programs is being reduced by a little over $1.8 million from last year, down to $4 million.
Another funding cut hits the Battlefords directly. Provincial funding totaling $540,000 for five urban parks – Wakamow in Moose Jaw, Chinook Parkway in Swift Current, Pehonan in Prince Albert, Tatagwa in Weyburn, and most importantly to the northwest region, River Valley in Battlefords — is being discontinued.
Doherty explained the rationale behind the decision in his conference call.
“Revenue sharing is intended to provide municipalities with the financial means to address their priorities,” said Doherty. “If municipal funding is to remain sustainable, certain supports need to be rationalized as we move forward with transformational change.
“We believe the funding of municipal parks is best left for municipalities to prioritize,” Doherty said.
