Released on February 27, 2009
Revenues Down Less Than One Per Cent Since Mid-Year
Saskatchewan's fiscal position remains stable while other provinces are feeling the bumps and bruises of a volatile economy.
The Third Quarter Financial Report released today shows revenue holding steady despite falling commodity prices and the global economic recession. Additional taxes generated from a strong economy, increases in other own-source revenue, and higher potash revenue fully offset declines in other non-renewable resources.
As a result of strong revenues, the government has decided not to take $185 million in dividends from the Crown Investments Corporation in order to increase financial flexibility in the Crowns for their future capital requirements. The net result is that revenue at third quarter is forecast to be $107.7 million, or 0.9 per cent, lower than at mid-year. The overall increase in revenue since the Budget was released is $2.79 billion or 30 per cent.
"Saskatchewan is continuing to hold its ground amidst the pressures of the global economic downturn," Finance Minister Rod Gantefoer said. "Revenue levels have dropped slightly since Mid-Year, but our diverse economy has cushioned any heavy blows felt by falling commodity prices."
Debt levels remained unchanged from Mid-Year at $4.2 billion, nearly 40 per cent or $2.7 billion lower than Budget due to large debt paydowns over the 2008-09 fiscal year. The third quarter projects a General Revenue Fund surplus of $2.3 billion, unchanged from Mid-Year.
Expenses are anticipated to increase by $661 million from Mid-Year, which includes:
- A $500 million "economic booster shot" announced in early February which provides major infrastructure funding for health facilities, schools, highways and municipalities;
- $98.5 million to help build a new south bridge in Saskatoon; and
- A recently announced $71.4 million for the Saskatchewan Cattle and Hog Support Program to aid struggling livestock producers.
These increases were partially offset by Teachers' Pensions and Benefits in Education, which is down $63.3 million due to reduced requirements for the Teachers' Superannuation Plan.
The accelerated infrastructure spending will be funded using the province's cash reserves in the Growth and Financial Security Fund, reducing the fund balance to about $1.2 billion.
"Stronger-than-expected revenues this past year provided our government with additional fiscal flexibility," Gantefoer said. "This has allowed us to take deliberate steps to maintain economic momentum through debt reduction, accelerated infrastructure funding and personal income tax reductions."
Gantefoer said unlike most other governments in Canada, the Saskatchewan government will deliver a balanced budget this year, even though provincial revenues will be down significantly from 2008-09.
"We are carefully evaluating initiatives that will continue our growth and improve competitiveness," Gantefoer said. "However, we do have tough choices ahead of us given the current global economic climate."
Gantefoer has announced that Budget 2009-10 will be delivered on March 18.
Copies of the Third Quarter Financial Report are available online at http://www.finance.gov.sk.ca/QuarterReports/3QuarterReport200809.pdf.
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For more information, contact:
Vanessa Beaupre
Finance
Regina
Phone: 306-787-8109
Email: vanessa.beaupre@gov.sk.ca