REGINA – The Saskatchewan government is cutting spending and has imposed a hiring freeze as it wrestles with a ballooning deficit of about $1 billion.
Finance Minister Kevin Doherty released a fiscal update Tuesday that shows the shortfall is far higher than the $434 million deficit the government projected when it introduced the budget in June.
Low oil and potash prices are having a greater impact on revenue than expected, but corporate income tax, personal income tax, provincial sales tax and fuel tax are also down, he said.
“To start moving the provincial budget back to balance, significant measures are needed with more to follow in next year’s budget,” Doherty said.
The restraint measures include watching public salary expenses, pegged at about $6.3 billion a year, because “if we are going to control government spending, we have to control our labour costs,” he said.
A plan to save $217 million across government includes layoffs and limiting overtime in health care to save $22 million. There are also plans to save another $22 million in health with cuts to programs and what the government calls program delivery changes.
Tax hikes could be considered for next year.
But NDP finance critic Cathy Sproule says something’s wrong with the deficit numbers coming four months after the most recent budget.
“It’s more than doubled, so I think there are some serious problems with the way they’re projecting,” said Sproule.
The larger deficit also means the province is borrowing $800 million just to operate.
“We simply haven’t got the cash this year to pay all of our bills,” said Doherty.
“If you have that kind of revenue fall off, that precipitously, you have to continue to pay the salaries of your nurses and your physicians and your teachers and your social workers and all the different things that government’s involved in, so we need to borrow some money to pay those bills this year.”
Doherty said borrowing to covering day-to-day operating expenses — not just for capital projects — is only a bad move if you have no plans to stop doing it.
He said the province has a plan.
“We have to take strong measures on the spending side,” he said.
“At the same time, when your economy’s going through some challenges, you don’t want to further shock your economy by laying off literally hundreds of teachers or hundreds of nurses or hundreds of social workers or hundreds of government workers.”
The borrowing doesn’t sit well with Todd McKay, prairie director of the Canadian Taxpayers Federation.
“This is a delayed tax hike because we’ve got to pay this money back. We’ve got to pay it back with interest,” said McKay.
The province needs to get a hold on expenses, he said.
“It’s not going to be easy. It’s not fun. But that’s what folks are doing at their kitchen tables and that’s what needs to happen in government.”
Alberta and Manitoba have taken similar steps.
Rachel Notley’s government laid out a plan in August to increase capital spending, and borrow to pay for day-to-day operating expenses while avoiding cuts to front-line staff and services.
The Manitoba government said Monday that it plans to pass a law to control wage increases in the public sector and aims to eliminate dozens of provincial boards and commissions as it tries to bring down a stubborn deficit.