Sask. forecasts $250M deficit, down $1.3B from original budget projection

Saskatchewan's latest mid-year financial update projects a $250-million deficit, a $1.3-billion reduction from the $1-billion surplus predicted in the annual budget.

Finance Minister Donna Harpauer said the swing is due in part to drought that resulted in crop insurance payouts, along with lower potash prices and sales than expected.

"Two large factors outside of the government's control play into this forecast. The drought was unforeseen, reducing projected crop production by 20 per cent in 2023, when compared to 2022," Harpauer said.

"Potash prices and sales dropped because potash from Russia and Belarus flowed to large markets including China and India, despite being subject to Western sanctions in response to Russia's invasion of Ukraine."

The province has forecasted a $1-billion surplus in the 2023-24 budget released in March. That figure dipped by $485 million in an update provided in August.

Harpauer said despite that large swing, she remains confident in the province's economy. Saskatchewan ranks second among provinces in projected real GDP growth this year.

"Even considering these impacts, our fiscal picture is solid, more people than ever are living and working in Saskatchewan, and our economy is resilient."

Harpauer said she is not considering austerity measures or tax increases, because the government already increased the PST and expanded what it applies to, lessening reliance on non-renewable resource revenues.

As for a potential cut to the PST or other taxes, Harpauer said it is too early to make that call.

"It is not likely we could do any tax cuts in this budget, but we are very early in our budget deliberations and we will see where the economy goes."

Overall revenue is up $35.2 million from the budget's projections. Taxation saw a $414.7-million increase from budget, with corporate income tax up $289 million and PST up $150 million.

Resource revenues took a large hit, with a $717.8 million decrease in non-renewable resource projections. Potash was the largest factor with a decrease of $552 million. The resource surcharge was also down by $265 million due to lower potash prices and sales.

Potash prices have declined by 28.6 per cent and production is down 5.9 per cent from budget.

Harpauer said listening to the industry, potash prices and sales are not "at the norm" and spikes seen in recent years will not be repeated.