P.E.I. projects record $183.9M deficit in budget designed with population growth, trade war in mind

Prince Edward Island is projecting the largest budget deficit in its history for the 2025-2026 fiscal year, according to the province's latest operating budget, tabled in the legislature Thursday by Finance Minister Jill Burridge.

The budget projects revenues of $3.34 billion and expenditures of $3.53 billion, resulting in a forecasted deficit of $183.9 million. That is more than triple the $59.5 million deficit forecasted in last spring's budget for the same fiscal year.

The previous record deficit was in 2020-2021, the first year of the COVID-19 pandemic, when the province recorded a $172.7 million deficit.

While the government led by new Premier Rob Lantz expects the deficits to decrease in the years ahead, they will still remain high. The province projects a deficit of $167.8 million in 2026-2027 and $119.5 million in 2027-2028.

Burridge said the rising costs are being driven by population growth, an aging population, and ongoing global trade uncertainties — factors she noted are also affecting other parts of Canada.

"We're no different than other provinces out there," she told reporters.

Burridge's speech made promises on two hot-button health-care issues: the future of Prince County Hospital in Summerside and the number of people still without a family doctor or nurse practitioner to manage their primary health care. 

"The steps we have taken to stabilize health care are beginning to work," she told the legislature.

"We see it in improved access to care, in shorter wait times, and the return of full-time internal medicine coverage at Prince County Hospital, allowing their ICU to formally reopen this summer. And we will see it when 10,000 Islanders are removed from the patient registry this year — having them connected to the primary care they need and deserve."

The budget was released amid growing global instability, including rising political tensions and trade conflicts, with U.S. president Donald Trump launching a trade war with Canada and many other countries around the world.

"We know the world around us is uncertain," Burridge said. "Today, we take another step forward — securing our future by strengthening our province, investing in the people who make it great, and ensuring a strong, sustainable future for all."

1st P.E.I. budget in the Rob Lantz era promises money for tariff action and tax relief

3 days ago

Duration 4:30

Prince Edward Island's budget for 2025-26 was released today, with a focus on spending to deal with a growing and aging population as well as programs to ease the pain of a trade war with the United States. There's also a big deficit projection, the highest in the province's history. CBC's Kerry Campbell breaks down the numbers.

Supporting the economy and workforce

To address the uncertainty, the province is introducing a range of tax reforms that will save Island businesses a total of $9.3 million to reinvest in their operations, Burridge said. These include raising the small business tax threshold by $100,000 to $600,000, and lowering the corporate income tax rate from 16 per cent to 15 per cent.

• READ: Finance Minister Jill Burridge's full budget speech 

In addition, province will be addressing personal income taxes. This includes immediately increasing the basic personal exemption to $14,650. Then in January of next year, the province will raise all five tax brackets by 1.8 per cent and further increase the basic personal amount to $15,000.

The province also announced a minimum wage increase to $17 per hour, with details to be released soon, the finance minister said.

Targeted investments to support the economy and workforce include:

• $42 million for tariff and trade response, including $32 million for a Tariff and Trade Contingency Fund.
• $10 million for a Tariff Working Capital Program.
• $3.6 million in oyster industry supports, including a $3-million contingency fund to respond to MSX challenges.
• $1.5 million for reskilling and upskilling workers.
• $353,000 for expanding air access.
• $100,000 to support young farmers through the P.E.I. Young Farmers Association.

Post-secondary students will see increased financial aid, with the George Coles and Marion L. Reid bursaries each rising to $3,500.

Health-care investments

Health care continues to be a top spending priority. Health P.E.I.'s budget will increase from $971.8 million in 2024-2025 to nearly $1.1 billion for the current budget year.

The Department of Health and Wellness will also see an increase from $153 million to $166.4 million.

Highlights include:

• $16.8 million for the new Faculty of Medicine based at UPEI.
• $21 million for long-term care, including increasing per diem rates for private long-term care homes, and funding to ready 103 new long-term care beds, with plans to add an additional 175 new long-term beds in the future.
• $4.8 million to expand virtual care.
• $4 million for support programs designed to help seniors stay in their homes longer, including the Self-Managed Care Program and the At Home Caregiver Benefit Program.
• $1.1 million to expand health-care training support programs.
• $650,000 to hire internationally trained nurses.
• $500,000 to expand the Student Nursing Employment Program.
• $215,000 for a new upskilling pathway for LPNs to become RNs. This brings to a total investment of $818,000.
• A new Practice Readiness Assessment Program will help certify up to 40 internationally trained physicians annually.

Education

Spending for the Department of Education and Early Years will rise from $104.1 million to $117.3 million.

Key investments include:

• $10.5 million for early childhood care, including creating or transitioning 190 affordable spaces. This will also include the continuation of the early years centre expansion loan and grant program and increasing wages for early years centres' staff.
• $9.2 million for investing in the education system, including new funding for staffing, giving teachers more prep time, and increasing the number of front-line school staff.
• $2.5 million in additional support for the School Food Program, bringing the total to $7.5 million this fiscal year.

Investment into communities, infrastructure

As the province is launching a review of the Municipal Government Act, it has entered into an agreement to provide interim funding to municipalities, and $5.5 million will be earmarked for this.

Other key investments include:

• $3.2 million for the community sector, including increased funding to food banks.
• $3 million to boost the Home Heating Assistance Program to $7.7 million.
• $810,000 to create a Joint Enforcement Team to keep communities safe, as police combat mid-level drug trafficking and organized crime.
• $160,000 to maintain affordable transit, including free transit for students and subsidized passes for all Islanders.