Released on November 27, 2002
Finance Minister Eric Cline released the province's 2002-03 Mid-Year Reportthis morning.
Stronger than expected economic growth, coupled with higher than forecast
prices for oil and gas and higher income tax revenues, resulted in higher
than expected own-source revenues during the first half of the budget
year. Own-source revenue - the money generated by economic activity within
Saskatchewan - is now projected to be $580.1 million higher than forecast
in the provincial budget.
"This shows that Saskatchewan's non-agricultural economy is expanding and
growing steadily, increasing Saskatchewan's ability to succeed in a
competitive global marketplace," Cline said.
On the other hand, the drought impacted both operating spending, which
increased $81.7 million over budget; as well as total debt, which increased
$521.7 million over budget.
"Nearly 90 percent of the increased expenditures are directly related to
the severe drought," Cline said, noting that Saskatchewan Environment is
projected to be up $46.9 million over budget, due largely to higher forest
fire fighting costs, and Saskatchewan Agriculture, Food and Rural
Revitalization is projected to be up $25.5 million over budget, largely due
to drought assistance for livestock producers.
"These increased expenses, along with record payments by the Saskatchewan
Crop Insurance Corporation and increased payments from the Forest Fire
Contingency Fund, are a large part of the increase in the province's debt,"
Cline said.
A $600.3 million decrease in federal transfers has had a particularly
negative impact on the province's finances.
Nearly half of the $600.3 million equalization payment reduction was the
result of unilateral federal adjustments which resulted in a significant
change in entitlements for 2002-03 and prior years.
"About half of this revenue loss was completely unexpected. As a result,
the Federal Minister of Finance has committed to a full review of the
Mining Tax Base component of the equalization program. Mr. Manley has
committed to a decision on this matter by the February, 2003 equalization
update," Cline said.
Reduced revenue and increased expenditures mean that at the mid-point in
the budget year, the financial position of the Government of Saskatchewan
has changed by $99.2 million, requiring an additional transfer from the
Fiscal Stabilization Fund to maintain a balanced budget this year.
"While the dramatic reduction in federal transfers has created an
unexpected financial challenge for Saskatchewan, we will continue to fund
the priorities of Saskatchewan people, like health and education," Cline
said.
The report also contains detailed progress reports on government spending
initiatives outlined in the 2002-03 Budget.
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To view a recording of the Minister of Finance issuing the Mid-Year Report,
go to www.gov.sk.ca/finance and click on the animated computer icon.
Instructions will guide you through the videostreaming process. A copy of
the report is also available for download.
For more information, contact:
Roy Schneider
Saskatchewan Finance
Regina
Phone: (306) 787-8109