Sask. budget 2018: PST stays at 6%, government projects $365M deficit

Saskatchewan is keeping its provincial sales tax steady at six per cent as it projects a deficit of $365 million, according to its 2018-19 budget, tabled Tuesday by provincial Finance Minister Donna Harpauer. 

The budget boasts record spending in both health and social services alongside $30 million in previously announced restored funding for K-12 education.

It forecasts revenues at $14.24 billion, with spending at $14.61 billion, leaving a $365 million deficit.

The province's deficit was estimated at $696 million in last year's budget and was down to $595 million at the third quarter update.

"Last year's budget, as difficult as it was, began the shift from our over-reliance on resource revenue to a more stable source of revenue and there was difficult decisions but we're seeing the benefit of those decisions in this budget," Harpauer said.

The province is estimating its debt to surpass $20 billion by Mar. 31, 2019.

The province is also forecasting a moderate rise in both oil and potash prices. Non-renewable resource revenue accounts for 10 per cent of all government revenue in the new budget, the same as last year, which is down from 32 per cent in 2008-09.

Compensation savings

The Saskatchewan Party government announced a 3.5 per cent wage reduction to public sector employee compensation in last year's budget, amounting to a projected savings of $250 million, but that plan does not appear in this year's budget.

The government is aiming for $70 million in compensation savings over the next two years. It says this will be achieved through "efficiency initiatives" and "overtime management."

"There are no layoffs related to this budget," Harpauer said.

She added she could "never say no layoffs" because ministries may make decisions on jobs in the future.

Aiming for $6M surplus

Premier Scott Moe said the $70 million in savings will be split over two years and will come from the executive government and Crown corporations.

"The plan is to work through attrition and retirements across government to achieve these dollars," said Moe. 

The government is aiming for a $6 million surplus in 2020.

"It isn't a lot in a $14 [billion] budget but it is a surplus, it is a surplus and when you look across the nation of Canada they're few and far between at this moment," he said.  

'Muted' document

NDP Leader Ryan Meili described the budget as a "muted" document.

"I don't see a lot in there that is really inspiring or exciting, I think a lot of people were expecting to see some change — new premier, new leader of the opposition, there's been some change," he said. 

Meili said he believes the public was expecting more change under Moe, who replaced the long-standing Brad Wall as premier in January. 

He said the budget does not include a strategy for reducing poverty and increasing employment. 

"They're predicting, and even kind of boasting, about the highest social service budget in the province's history," said Meili. 

"I don't know how that's something to boast about — that's the most people needing social assistance in our history, that's more people in poverty."

The province was able to cut into its deficit through a large savings in pension liability and reduced expense for the Teachers' Superannuation Plan, a savings of $352 million in the education budget alone.

The government said pension funds stopped losing money, meaning the province had to contribute less to fulfil its obligations. These changes have no impact on pensions themselves, according to the government.

PST on cannabis

Last year, the government raised the provincial sales tax (PST) one point to six per cent and expanded the scope of what the tax applied to. There will be no rate increase this year, but the province is applying the tax to two more things.

A PST exemption for light used vehicles will be eliminated, generating an estimated $95 million. If a trade-in is made, PST will only be paid on the difference in price between the trade-in and the used vehicle.

A PST exemption for Energy Star appliances is also being scrapped.  

PST will also be applied to the retail sale of cannabis, although revenue generated from this has not been included in the budget.

"The uncertainty is huge. This is very uncharted territory. We don't believe [cannabis] revenues will be significantly strong in the first year," Harpauer said.

Record spending

The government is breaking a record for health care spending in the new budget.

The biggest chunk of the $5.77 billion is $3.5 billion for the newly created Saskatchewan Health Authority. The province says it is saving $19 million on amalgamation of services into the single authority.

The province is also committing $11.4 million in new money for mental health initiatives, which the province said will cover the cost of hiring 40 new full-time positions.

HIV medications will now be 100 per cent covered at an additional cost of $600,000.

"Rates of HIV in Saskatchewan are just far too high," said Health Minister Jim Reiter.

"They're the highest in the country, and we needed to take some significant steps to deal with that and we think this is a huge step in that regard as well."

Children under the age of six with Autism Spectrum Disorder are now eligible for $4,000 in government money per year, which is a total investment of $2.8 million.

The province is also increasing spending in the Ministry of Social Services by $25 million, to a record $1.38 billion.

This includes an increase of $10.4 million for community-based organizations and foster families.

The Saskatchewan Rental Housing Supplement is being replaced by a program co-developed with the federal government.

As of July 1, 2018, the province will stop taking applications, but clients enrolled before then will continue to receive benefits.

Debt 'unacceptable,' NDP says

On Feb. 6, Moe announced he would keep a campaign promise to commit $30 million in the Ministry of Education to hiring 400 teachers and educational assistants across the 27 school divisions. This $30 million is the total increase in the $1.87 billion school operating budget for 2018-19, up 1.6 per cent from last year.

Last March, the province slashed $54 million from the education budget.

NDP finance critic Cathy Sproule says people in Saskatchewan are once again receiving tax and fee increases in this year's budget.

"I think this is a disappointment," Sproule said. "This province is on track to triple its debt since 2008 — it's unacceptable." 

The NDP had been calling for a reinvestment in K-12 education, and Sproule said she was disappointed the $54 million cut from the last budget has not be reversed fully.

Bu Sproule said she is pleased the province went ahead with increases to mental health funding, HIV drug coverage and support for children with autism.