REGINA – Tanking oil prices are forcing the Saskatchewan government to put the brakes on spending.
A budget update shows the province is projecting a deficit of $262 million, compared with a surplus of just over $100 million that was forecast in March.
Finance Minister Kevin Doherty says getting the books back in the black is going “to be a tough challenge.”
“I want to be definitive here, my goal is to try to get us to balance. I’m not sure I can get us there,” Doherty said at a news conference Monday.
“We are already continuing work on the expenditure side, which we manage. If oil continues to drop even further, if potash softens even further, I can’t control any of that. If there’s another natural disaster that occurs at some point in time, I can’t control that. Government needs to respond.”
Expenses are up $99 million from the budget, in large part because of the cost of fighting forest fires last summer.
While the province is spending more, it’s also bringing in less money because overall revenue is down $270 million from the original budget forecast.
The biggest drop in revenue is from non-renewable resources, such as oil and potash, which are down $388 million from budget. Oil was forecast to be about US$53 a barrel in the budget, but is now expected to average US$49.50 a barrel. Both figures are far below the US$93 a barrel that oil averaged last year.
The province also says there are pressures because of a smaller harvest and a slowing growth in the economies of some of Saskatchewan’s major trading partners.
Doherty says economic forecasters are predicting a rebound in 2016, but he doesn’t know when if and when that will take hold.
The minister says stronger commodity prices will benefit Saskatchewan, but can’t be counted on, so government ministries and agencies that get money from the province should tighten their belts.
“I recall my days when I was a financial planner … I always said hope is not a plan. We need to be mindful of our spending,” he said.
The Opposition New Democrats are critical of both the deficit and the cuts the government plans to make to balance the books.
“I think it’s disappointing for Saskatchewan people to realize that through an unprecedented run of record revenues, we had a government that didn’t save a dime, that pile on new debt and that launched us into deficit in a very quick way,” said NDP finance critic Trent Wotherspoon.
The Canadian Taxpayers Federation is happy to see the province cut spending.
Todd MacKay, the federation’s Prairie director, says the Saskatchewan government should trim more money “to get back to living within its means.”
“We’ve got a combination of problems. Obviously we’ve got revenues down and that makes things more difficult. But look, with our family budgets, sometimes revenues go down, too, sometimes you hit a tough spot and things get a little big tight. At the end of day, we need to live within that reality,” said MacKay.