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Sask. gov't uses half of contingency fund to keep budget on track in 1st quarter

Interim Opposition NDP leader Nicole Sarauer has denounced the Sask. government's first-quarter budget update as 'ridiculous' and 'unrealistic.'

$82M in expense increases expected, which is double the rise in revenue

Micki Cowan · CBC News ·
The government has had to use up $165 million of its $300 million contingency fund, which was set aside for a three-year plan in March. (Radio-Canada)

The Saskatchewan government says it's keeping its budget on track in the first quarter, but only after dipping into its contingency fund. 

That led the Opposition NDP to slam the Saskatchewan Party's first quarter budget update as "ridiculous" and "unrealistic" after more than half of the contingency fund the province set up in March has been used.

Nicole Sarauer, the NDP's interim leader, accused Brad Wall's government of not having a long-term financial plan. 

"It doesn't take an accountant to realize that's not on track," Sarauer said Friday. 

Interim Opposition leader Nicole Sarauer says it's 'ridiculous' for the government to say its budget is on track after using up more than half of its contingency fund. (Radio-Canada)

In March, Finance Minister Kevin Doherty tabled his second consecutive deficit budget, projecting a $684.7-million deficit this fiscal year. The province set aside $300 million, intended as a safety net to keep the budget on track this fiscal year.

In order to keep on track in the first quarter, the government will be reducing its built-in contingency fund by more than half. 

Extra expenses of $82 million in the first quarter are expected to be double the increases in revenue, sapping about $40 million from the contingency fund. 

Meanwhile, negotiations over public sector wage cuts didn't go as quickly as planned, leading the government to take a further $125 million from the fund. 

The contingency fund will then sit at about $135 million with three quarters to go. 

Doherty said the government did not anticipate using as much of the contingency fund as it did. 

Expenditures in agriculture were about $40 million more than expected, Doherty said, which he attributed to more acres being insured than initially forecast.

"We have no reason to believe our forecast is off target, good or bad," Doherty said.  

"The reason we built a contingency into this year's budget was to help address in-year pressures," he said in an earlier press release.  "We still have work to do to control government's overall costs, including savings we are working hard to achieve in total compensation expense."

The government says there are also some positive economic indicators coming down the line.

Growth in manufacturing, vehicle sales

So far this year Saskatchewan is in the top three among Canadian provinces in growth in manufacturing sales, population and vehicle sales. 

Also, Doherty said private sector forecasters have increased GDP growth forecasts to 2.1 per cent, up from an average of 1.7 per cent at budget time. 

The province has seen more money from oil as well, with the province producing 16 million more barrels than forecast at budget time, he added.

Potash prices have increased, as have Crown land sales.

"Oil companies can make money at $50 [a barrel] oil. Therefore, they're taking up more leases of Crown land to have that production come," Doherty said.

Oil was forecasted at $56.25 a barrel at budget time. The first quarter forecast is now $49.75 a barrel.

The government said it's planning to return Saskatchewan's budget to balance in three years, by 2019-20.

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