Released on February 7, 2005
Saskatchewan's Third Quarter report released today showed the province's surplus and permanent debt reductions unchanged from mid-year.Operating expense is forecast to be $6.4 billion, up $81.4 million from mid-year. This is due primarily to:
·A $101.1 million increase for Saskatchewan Agriculture, Food and Rural Revitalization to fund Canadian Agricultural Income Stabilization (CAIS) (bringing the government's total commitment for this program to $210 million for 2004-05) offset by savings in the BSE and Crop Insurance programs
·The increases are partially offset by a $55.1 million decrease for Learning due to moving property tax relief until the 2005-06 and 2006-07 fiscal years.
Total revenues grew primarily due to a $75 million increase in the Crown Investment Corporation dividend (to offset some of the CAIS costs) resulting from an improvement in CIC's financial position in the later part of the year.
Revenue increases were offset by a decrease in oil revenue of $23.7 million. This decrease comes despite the fact that the forecast for West Texas Intermediate (WTI) has increased from mid-year (from $40.05 to $43.12 US per barrel).
"Oil revenue is volatile, and while it contributed to the large improvement we saw at mid-year, now we're recording a negative impact," Finance Minister Harry Van Mulligen said. "It's important to note that almost 50 per cent of Saskatchewan's oil is 'heavy' and this oil commands a lower price than light sweet crude oil. The spread between the prices of these two types of oil has widened. The difference, which historically has been about $6-7 US per barrel, is now about $14 US per barrel."
The higher US-Canada exchange rate is also a factor in decreased oil revenue.
"As we turn toward developing the 2005-06 Budget, we will continue with our balanced approach – carefully weighing taxpayer relief and spending with debt reduction – to meet the needs of Saskatchewan people," Van Mulligen said.
The 2004-05 Third Quarter Report can be accessed at: www.gov.sk.ca/finance
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| Lorri Thacyk Finance Regina Phone: 787-6605 |