聽 聽 聽 聽 聽 聽 Around this time in November, the provincial finance minister traditionally provides the fall budget update, letting the people of Saskatchewan know how well we are doing. That update is coming soon, but on November 16, we got a preview from Finance Minister Kevin Doherty.
聽聽聽聽聽聽聽聽聽聽聽 It was not good. If Saskatchewan was a patient, it just heard that not enough blood circulation is getting to all parts of the body, and it looks like some toes are going to have to be amputated. It might even be a whole foot.
聽聽聽聽聽聽聽聽聽聽聽 Revenue for this fiscal year is expected to be down $600 million. Less taxes coming in and less royalties from non-renewable resources are the culprits. While their US $45 per barrel WTI projection is holding, potash and uranium are hurting. I wonder how large an impact we will see from the lousy weather had on harvest in much of the province?
聽聽聽聽聽聽聽聽聽聽聽 鈥淲hat that reflects is we have lower income tax coming in (and) lower corporate tax.
聽聽聽聽聽聽聽聽聽聽聽 鈥淔uel taxes are down. Consumption taxes 鈥� that being the provincial sales tax 鈥� are down,鈥� Doherty explained, as reported by CJME.
聽聽聽聽聽聽聽聽聽聽聽 鈥淎ll combined, our forecast right now is down about another $400 million in this fiscal year since I brought out the budget on June 1.鈥�
聽聽聽聽聽聽聽聽聽聽聽 Since Doherty鈥檚 not going to raise taxes this year, cuts will be the order of the day. But for the next fiscal year, nothing is off the table.
聽聽聽聽聽聽聽聽聽聽聽 In the past several years, the Saskatchewan Party government has been continually preaching that it is looking for internal ways to cut back expenditures. From the people I interact with, I鈥檝e noticed it in substantially reduced travel to conferences, for instance. For some reason, our son is not getting nearly as much speech therapy assistance as he used to. Could that be cuts, a personnel issue, or both?
聽聽聽聽聽聽聽聽聽聽聽 Large scale cuts are something we haven鈥檛 really seen in the last 20 years. But we most certainly did see them in the 1990s, when the Roy Romanow NDP government cut everything possible to straighten out our province鈥檚 deficit-stricken finances.
聽聽聽聽聽聽聽聽聽聽聽 When my eventual wife graduated nursing in 1997, they laid off 600 nurses that year. It took her a year to find work as a registered nurse. Times were tough. A few years later, things turned around. When my sister, Melanie, graduated nursing in 2001, she could find work anywhere, and got a signing bonus when she did hire on at Saskatoon City Hospital. Times had changed.
聽聽聽聽聽聽聽聽聽聽聽 Since then, I have not heard of any nursing layoffs in Saskatchewan until a few months ago. Some nurses were laid off in Regina.
聽聽聽聽聽聽聽聽聽聽聽 And that鈥檚 my point. For the last several years, the premier and his finance minister have been preaching restraint and attrition. But there鈥檚 only so far you can go with that. Now, I fear, 2017 will be the year 鈥渃utbacks鈥� returns to the Saskatchewan lexicon in a big way. Increased taxes might be next.
聽聽聽聽聽聽聽聽聽聽聽 There鈥檚 a simple solution to this problem: magically make oil go back up to US $100 per barrel for WTI, and that deficit vanishes. It would make about a billion-dollar difference in our finances. But unless you have an inside track with the Saudi king and/or oil minister, don鈥檛 bet on it.
聽聽聽聽聽聽聽聽聽聽聽 In the 2013-14 budget, before the oil crash, oil was expected to bring in $1.441 billion.
聽聽聽聽聽聽聽聽聽聽聽 For the 2016-17 budget, that number was $509.7 million.聽
聽聽聽聽聽聽聽聽聽聽聽 Otherwise, probably the easiest, single thing the province can do is increase the provincial sales tax. At $262 million for each point on the sales tax, you would need almost three percentage points to roughly make up the deficit, and four if you wanted to make up the oil shortfall. That鈥檚 based on the 2016-17 budget, released in March, which anticipated $1.312 billion on a five per cent PST.
聽聽聽聽聽聽聽聽聽聽聽 Sure, dramatic increases in potash could make the difference. Uranium would help. But it鈥檚 oil that really makes the difference.
聽聽聽聽聽聽聽聽聽聽聽 For the last two years, the oil downturn has hurt primarily the oilpatch areas of the province. Now its impact will be felt by everyone.
