From 'the brink' to a 'brighter future': Pre-election N.L. budget touts improving outlook
Atlantic Accord deal means $1.9-billion surplus for 2019-20
Three years after Newfoundland and Labrador taxpayers were warned the province's fiscal sky was falling, they are now being showered with good news weeks before going to polls.
"In 2016, our government had no choice but to make difficult decisions," Finance Minister Tom Osborne said at the House of Assembly on Tuesday afternoon.
"None of us wanted to do this but it was necessary to address the financial crisis that Newfoundland and Labrador was facing."
Just months after taking office, the Ball government faced down a multibillion-dollar deficit by bringing in an array of tax increases — including income taxes, sales taxes, gas taxes — and added fees on everything from hatching to matching to dispatching.
Osborne said "our province was on the brink" at the time.
But now?
"Today, our financial outlook is significantly improved."
That means no tax increases this year.
And the Ball government plans to put some money back into the pockets of taxpayers that it started removing three years ago.
The budget confirms that the tax on automobile insurance is gone — a $60-million decision this year.
It follows through with a pledge for affordable electricity into the future, after Muskrat Falls comes on stream.
And the deficit reduction levy is still on schedule to end at the end of 2019.
Accord deal means big surplus
Perhaps most surprisingly, after years of red ink, the province is projecting a $1.9-billion surplus this year.
But to come up with that number, the government is booking revenue it won't receive for years or even decades under the recently announced Atlantic Accord deal with Ottawa.
The net benefit from that arrangement, which runs until 2056, is $2.5 billion.
Only $134 million of that cash will actually flow this year.
But because annual payments are guaranteed at set amounts going forward, government officials say their handling of the Accord is in line with public sector accounting standards.
Osborne told reporters it wasn't his choice to do things this way.
"It's the accounting system, accrual accounting," he told reporters.
"I would have preferred to have seen this chop away at our deficit next year, and the year after, and to help us with surpluses every year. In fact, I argued with financial officials in the department, but this is the system we use, it's accrual accounting. It is what it is."
Without that Accord boost, Newfoundland and Labrador would again have run a significant deficit this year, of around $575 million.
Spending is budgeted to continue to rise, to just over $8.4 billion.
Balanced budget planned for 2022
The province insists it is still on track to balance the budget by 2022.
Before that happens, the deficit is forecast to balloon back up to nearly $800 million in 2020.
The heavy lifting related to big planned cuts won't happen until future years.
To balance the books, the province says it will spend $600 million less in 2022 than this year.
St. John's financial analyst Larry Short — who attended pre-budget briefings with CBC journalists — says the plan doesn't address cost control.
"There's no major expenditure reductions, there's no talk of a long-term plan," Short said.
"The budget is based on the fact that the belief is that oil will continue to be our primary source of revenue for the province for the future."
Short said the budget lacks details on how the government is going to turn the provincial economy into a post-oil economy.
Election just weeks away
Hours before the Liberal finance minister was inside the legislature delivering his budget speech, a Tory election bus was parked outside.
And Osborne's speech about his financial plan touched on that political battle ahead.
"As I look at the faces on this side of the House of Assembly, I see a united team of MHAs under the leadership of a premier who has a vision for the province that we all rally behind," Osborne told the House.
The budget almost certainly won't get passed before voters go to the polls.
An interim supply bill has already given the government the authority to keep spending money until around the end of June.
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