Released on July 27, 2007
The government's First Quarter Report, released today, reflects new funding announced in the March federal budget, improved oil revenues offset by decreased potash revenues, and an increase in the General Revenue Fund (GRF) surplus of $162 million.
"Our government continues to make debt reduction a priority," Finance Minister Pat Atkinson said. "First Quarter improvements, together with a higher-than-expected 2006-07 surplus, mean that forecasted government debt will drop by $400 million.
"Over the past four years, we have reduced government debt by more than $1.2 billion. Government debt now is forecast to be $6.9 billion at year-end, the lowest it's been since 1990-91. Government debt-to-GDP ratio is forecast at 14.7 per cent, the lowest it's been in more than 20 years."
The First Quarter Report forecasts an overall revenue improvement of $390 million over Budget for the year. The majority of this ($330 million) is from one-time federal funding, including equalization. The improvement also reflects increased oil and sales tax revenue, offset by reduced natural gas and potash royalties. The reduced potash royalties are mainly due to a significant increase in planned capital spending by the industry.
The government is committing to use 70 per cent of the one-time equalization payment announced in the 2007 federal budget for debt reduction. The balance of the $226 million equalization payment will go toward property tax relief - increasing the rebate from 8 to 10 per cent this year for residential and commercial property and extending the rebate program to 2008. Agricultural property receives approximately a 38 per cent reduction.
"The equalization payment received this year falls well short of what was promised by the federal government and will be the last equalization funding that our province will receive for the foreseeable future," Atkinson said. "This is due to the inherent unfairness of the federal equalization formula's treatment of our natural resources."
In addition, Saskatchewan received $104 million in unbudgeted, one-time federal trust payments. This money will fund initiatives related to the ecoTrust for Clean Air and Climate Change, patient wait time guarantees, labour market training, early learning and child care, and cervical cancer immunizations. This funding is being transferred into the Fiscal Stabilization Fund (FSF) until program details are finalized.
Spending is forecast to increase about $98 million over Budget. The majority of this is attributed to spring flood relief, additional health care funding for workplace health and safety, and accelerated Building Communities project funding to meet increased demand. Government debt servicing costs are forecast to decrease by $8 million due to the debt reduction.
"Our government continues to be on track with its fiscal plan," Atkinson said. "Over 80 per cent of the revenue improvement is going to either the surplus for debt reduction or into the FSF for future use for the purposes specified by the federal government."
The First Quarter Report is available online at http://www.gov.sk.ca/finance/quarterreports/.
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For more information, contact:
Debbie Clark
Finance
Regina
Phone: 306-787-8109
Email: dclark@finance.gov.sk.ca