Fiona costs and inflation take big bite out of P.E.I. financial position

The P.E.I. government says it spent $227 million more on programs than was budgeted for 2022-23, and it is laying the blame on post-tropical storm Fiona and inflation.

At budget time last year, program spending was estimated to be $2,428 million for 2022-23. The forecast in the budget tabled in the legislature on Thursday was $2,655 million. (It's a forecast because the financial procedures for the year have not yet been completed.)

Inflation was high right across Canada during the last fiscal year, and in most months P.E.I. racked up the highest rate in the country. That led to both indirect impacts for the province — with prices of goods and services up across the board — and direct ones. 

The province spent $70 million on programs providing direct support to Islanders to help them cover the increased costs of living. There were supports for farmers connected to continued problems with exporting potatoes due to potato wart, as well as lingering costs associated with the COVID-19 pandemic.

Combined, these issues ballooned contingency spending for the province. The budget for general government spending in 2022-23 was pegged at $41.3 million last winter, but is now forecast to be $116.1 million.

Costly cleanup

The fallout from post-tropical storm Fiona in late September also affected spending in a number of departments.

Cleaning up has been expensive. The budget forecast includes an extra $27.1 million in Transportation and Infrastructure and $9.6 million in Agriculture.

Emergency Measures Organization spending, which had been budgeted at $684,900 months before the storm hit, is now forecast to be $31.4 million.

In addition, a program of direct support payments to Islanders in the wake of Fiona, administered by the Canadian Red Cross, cost about $20 million. That was part of a $42.2 million increase in spending in the Social Development Department.

Deficit estimate down

Despite the increased spending, the government is forecasting a lower deficit than it predicted last year.

Last winter, the government estimated the budget deficit would be $92.9 million, but it is now forecasting a deficit of just $66.2 million.

Revenues are forecast to be $270.4 million higher than estimated last year. More money than expected is being transferred from the federal government, but the bulk of the difference is in provincial own-source revenues, which are forecast to be $207.6 million more than budgeted last year.