Third Quarter Revenues are Down but Four Year Forecast Shows Improvement
Finance Minister Kevin Doherty today said provincial revenues took a big hit in 2015-16 because of the dramatic drop in oil prices but global economic recovery over the next few years coupled with Saskatchewan’s strong economic fundamentals means the province’s finances are expected to improve. Doherty released the 2015-16 Budget Update and Four Year Forecast today.
The Government of Saskatchewan is forecasting a deficit of $427 million for the 2015-16 fiscal year. The deficit projection is $165 million larger than the $262 million deficit forecast at mid-year.
“We have seen significant and sustained declines in oil prices impacting our revenue,” Doherty said. “While we have forecast a deficit this year and anticipate a more modest deficit next year due to continued low commodity prices and a weak global economy, our four year forecast projects improvement and a return to surplus in 2017-18.
“As revenues recover, our government will continue to control spending in order to ensure a return to surplus. Our goal is to maintain overall spending increases of 2.3 per cent per year, which is about the same rate that we have averaged over the past few years.”
Revenue at third quarter is down $158 million from mid-year and $428 million from budget. Revenue from non-renewable resources is down $617 million from the budget, reflecting lower than expected oil and potash prices, partially offset by the lower Canadian dollar. Expense is up about $7 million from mid-year and $106 million from budget, including a $100 million increase to fight forest fires and associated expense.
“Apart from the unprecedented forest fire costs, we were able to control spending and come in right on target on the expense side,” Doherty said. “That’s the side of the ledger government can control. The challenge is on the side we can’t control – the revenue side – and the huge drop in the oil price.
“We will continue to control spending while ensuring we provide the resources necessary for quality government services in areas like health, education and infrastructure.”