Auditor general tells King government to rein in spending through special warrants

P.E.I. Auditor General Darren Noonan says the provincial government is not following some of its own procedures and policies when it comes to spending. 

In his annual report to the legislature on Thursday, Noonan noted that Dennis King's Progressive Conservative government had been showing a lack of ability to estimate provincial revenues and a over-reliance on so-called special warrants — expenditures that fall outside the budget that are authorized by cabinet without a vote in the legislative assembly. 

The P.E.I. government authorized $326.7 million in special warrants in the last fiscal year, the highest total in the province's history. The money helped top up the "free heat pump" program and fund crop insurance payments, among other things.

Noonan said the frequency and value of those authorizations stand out as "a big problem" to the auditor general's office. 

"Not only is it the number of them and the dollar amount of them, but the majority of them are late and they're a significant portion of the appropriation that was approved in the spring. They represented 10 per cent of the overall appropriation [and] in my mind that's too much," he said. 

"It's unauthorized spending that's occurring and… the ability of members of the legislative assembly to discuss those potential expenditures is not happening."

If the province were properly managing its finances, Noonan said, most extra spending should be known about by May or June of the fiscal year at the latest. He also said special warrants should be issued before the province spends the money, but that's not happening under this government. 

Part of the reason for that is the province's inability to properly estimate its revenues, the auditor general said. 

The government's tax revenue estimates for the last two years have been "way off," which resulted in extra money coming in, some of which cabinet chose to spend through the special warrants process. 

Noonan said a more accurate revenue forecast would let the government better plan how it will spend on services and programs for Islanders. 

Biomass heating program 

On another topic in the report, the auditor general found inconsistencies with P.E.I.'s biomass heating contracts, including a lack of monitoring and penalties for contractors who don't harvest wood products in a sustainable way. 

The government's biomass program replaces fossil fuel with wood debris to heat buildings like schools and manors. 

"If a contractor was required to submit an annual report of the wood that was harvested and whether it was being done in a sustainable manner, a lot of those reports weren't being provided to the department," Noonan said. "When reports were received, they weren't being followed up to make sure the information included in those reports was accurate."

Noonan said the province has a duty to monitor what it takes from P.E.I.'s forests and ensure the replanting of trees to make sure the amount of wooded area on the Island stays constant or grows. That's especially important with events like post-tropical storm Fiona depleting Island forests, he said. 

Federal disaster relief glitches? 

Speaking of Fiona, Noonan also found some issues with how the provincial government applied to its federal counterpart for relief funding after that 2022 storm. 

The auditor general said the province developed a program for the funds, but didn't meet a timelog guideline that would have led to more funding. 

The King government also could have applied to get the relief funds in advance on a quarterly basis, but waited until the deadline and applied for all the money at once. Noonan said the province's interest costs would have been lower if it had applied for the advance payments. 

Debt concerns for 'future generations'

Meanwhile, Noonan said the provincial Treasury Board's policies and procedures are quite good on paper, but advised that staff follow them more closely. 

The auditor general's office has seen an increase in the actions government has taken in reaction to recommendations in its reports over the years, Noonan said.

But while the province continues to find extra money year over year, he pointed out that the Island's overall debt is getting very high at $2.45 billion. 

"For future generations, I'm concerned with the level of debt that they're going to be burdened with," Noonan said.