Saskatchewan tables Budget 2023, promising more capital investment, but no tax relief

The province aims to balance the budget by 2026/27 despite expenses up 5.9% compared to Budget 2022. Budget 2023 expects gross taxpayer-supported debt to be $18.1 billion — $409.4 million lower than its third-quarter forecast.

Saskatchewan tables Budget 2023, promising more capital investment, but no tax relief
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Last week, the Saskatchewan Party unveiled Budget 2023, flaunting a projected surplus while earning criticism for insufficient tax relief amidst unrelenting inflation.

Donna Harpauer, Minister of Finance, said they forecast $19.7 billion in revenue, with $18.7 billion set aside for expenses and $1 billion leftover as surplus.

"With a growing economy and strong finances in Saskatchewan, our government will pay down up to $1 billion in operating debt this fiscal year, reducing interest costs and investing those savings into needed services, programs and capital," said Harpauer.

The province aims to balance the budget by 2026/27 despite expenses up 5.9% compared to Budget 2022. Budget 2023 expects gross taxpayer-supported debt to be $18.1 billion — $409.4 million lower than its third-quarter forecast.

"Balancing the budget this year is good, but the government is wasting an opportunity by not committing to reducing the debt over the long term," said Gage Haubrich, Prairie Director of the CTF. 

"The government can't keep putting more and more debt on the backs of taxpayers and future generations."

According to RBC, the province intends to allocate $840 million to debt repayment this year — up from $520 million last fiscal year. However, provincial debt will keep rising despite projecting a $1 billion surplus in 2024/25. Expenses are projected to grow by $1 billion, and revenues will advance by $2.5 billion over last year's budget.

In Budget 2023, transfers from the federal government account for 18% of the total revenue, up from 10.4% last year. Taxation revenue is also up 19%, due mainly to higher corporate income tax revenue.

"By the end of 2024, the debt will be $18.1 billion. Interest payments will cost taxpayers $708 million annually, working out to $587 per Saskatchewanian," said the CTF.

Government business enterprises (GBE) debt, including Crown corporations, will also increase to $12.8 billion from last year's budget's $11.7 billion forecast. That debt is categorized separately because of the expectation it is paid back from the cash flow they generate.

Budget 2023 added that this debt is increasing due to capital investment for infrastructure, including $7.1 billion for healthcare, $4 billion in education, and $1.4 billion in agriculture.

"This budget delivers a 6.7% increase to the Ministry of Health to $6.9 billion, strengthening the healthcare system and taking significant steps to further attract, train and retain doctors, nurses and other key healthcare professionals in a growing province," said Harpauer.

More than $4 billion is going towards education in Saskatchewan, with $3.1 billion supporting pre-kindergarten to Grade 12 schools, early learning, child care, and libraries — 6.2% higher than last year's budget.

"More than 189,000 students are attending kindergarten to Grade 12 in Saskatchewan, the most in more than 20 years," said Harpauer.

Early learning and child care in the province will see $382.4 million, with the funding used to reduce childcare fees for kids up to the age of six down to an average of $10 a day.

The province's 27 school divisions will also see an operating fund of $2 billion, approximately $49.4 million higher than last year.

Sask. DLC, the province's new distance learning corporation aiming to give kids access to online courses, is getting $23 million for its start-up and operation.

The province is also investing in the economy, noting the Saskatchewan mineral exploration tax credit is increasing to 30% from 10%.

The Agriculture Ministry will allocate $548.2 million for programs, services and research.

The province said the AgriStability compensation rate is increasing to 80% from 70% for 2023. They aim to increase the province's tourist expenditures by 50% by 2030.

The province pegged $3.7 billion for critical infrastructure, committing to 1,000 kilometers of highway improvements.

The budget has $337.6 million set aside for healthcare capital, which includes infrastructure projects, long-term care bed replacements, health sector maintenance and equipment.

Around $152.3 million is going towards education capital, which includes renovations, expansions and new schools.

"This budget is about more people, jobs, and opportunities," said Harpauer.

"More doctors, more nurses, and more surgeries. More students, more schools, and more affordable child care. A growing economy, a brighter future, and a growing province whose best days are still ahead."

Despite a larger capital plan, the government will slim down its debt for the second consecutive year, marking the province's first debt reduction in nearly a decade with continued fiscal restraint moving forward.

"Like other resource-producing economies, booming commodity markets put Saskatchewan in a solid financial position in Budget 2023," said Battaglia.  

"Saskatchewan historically has tended to keep its spending up even after highly-volatile resource revenue turned down — giving way to deficits. Not this time."

According to Battaglia, the provincial government showed restraint in the face of expected weaker revenues. Budget 2023 has expenditures shrinking (-2.4%) by roughly the same margin as revenues (-2.9%), leaving its $1 billion surplus unchanged.

After significant windfalls in the prior two years, provincial non-renewable resource revenue is expected to dip more than one billion (-26%) from the last fiscal year. While the commodity market outlook remains strong, prices for essential products have weakened amid a softening economic environment.

Potash — one of Saskatchewan's primary minerals — is projected to drop to $815.80 per tonne — representing a 40% ($519) decline from the province's 2022 estimate. With soft resource revenues baked into the province's fiscal plan, Saskatchewan seems prepared for the 2023 downturn.

Though Saskatchewan's net debt-to-GDP ratio is among the lowest in Canada, expected to fall from 14.1% to 13.2% this year, RBC economist Rachel Battaglia cautions the government held back on tax cuts to present another projected surplus in 2023/24.

"After turning a projected $463 million deficit into a $1.1 billion surplus in 2022/23, there was room for returning some of the revenue bounties to taxpayers this year. Instead, the government held back on tax cuts and opted to present another projected outsized surplus of $1.0 billion in 2023/24." 

According to the CTF, no tax relief is featured in the budget. Recently, Alberta, Ontario, and Newfoundland all cut gas taxes. Manitoba, Quebec, and New Brunswick also recently cut income taxes.

"The government is seeing close to record revenues but returning none to taxpayers," said Haubrich. "Other provinces have been able to provide relief to residents, but Saskatchewan families are getting left out in the cold in this budget."

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