Saskatchewan says budget forecast good despite impact from flooding

Widespread flooding that washed out roads, swamped communities and drowned crops has taken a toll on Saskatchewan’s finances, but the government says its budget forecast still looks good.

The province’s first-quarter financial update released Friday pegs expenses at $10.29 billion, an increase of $161.7 million from the March budget estimate of $10.1 billion. Most of the increase is because of flood damage compensation.

More than 100 communities, including Maple Creek, Yorkton and Saskatoon, were designated disaster areas and got financial aid after severe storms brought flooding this summer. There was a $144-million increase in the agriculture budget to cover the province’s share of an aid program to cover farmland that either couldn’t be seeded, or land that was washed out after seeding due to near non-stop rain in the spring and early summer.

Finance Minister Ken Krawetz said those unexpected expenses are offset by a bigger increase in revenue, and the outlook is positive.

“In light of the disasters that we’ve seen happen over the last little while, I was actually anticipating that we would see a decline in some of the revenue,” Krawetz said at the legislature Friday.

“We’re not seeing that, so I think there’s great optimism in the province.”

The financial update forecasts revenue of $10.14 billion – up $194.9 million from the budget estimate of $9.95 billion.

The increase is because the province expects to double the amount of money from Crown land sales that it anticipated in the budget. Crown land sales are now expected to boost provincial coffers by $455.5 million instead of the $202.8 million initially estimated in the budget.

However, Krawetz noted that potash revenue is forecast to be $16 million below budget.

Plunging potash revenue hit Saskatchewan’s bottom line hard last year, forcing the province to hold the line on spending and trim costs. Despite cuts in the March budget, the government had to dip into its savings account.

Rod Gantefoer, Krawetz’s predecessor who stepped down at the end of the June, said potash volatility often kept him awake at night.

Krawetz said he’s not as worried about potash as he is about the weather.

“I think we’re seeing the potash industry stabilize. We’re seeing it stabilize in point of view of both production and revenue. That won’t keep me awake,” said Krawetz.

“The weather patterns that we’re currently experiencing are causes for concern because we’re a long ways from the end of summer. There have been in years past devastating storms (in) late August.”

In spite of the weather, Krawetz said Saskatchewan’s finances are on track.

But the Opposition NDP noted the province is still spending more than it collects in revenue. NDP finance critic Trent Wotherspoon said he’s disappointed to see the government running a deficit of about $600 million when it takes into account all areas of government, including Crowns.

“The government is claiming that this budget remains ‘on track’ which is exactly what concerns us,” said Wotherspoon said.

“If it means it is still on track to run back-to-back deficits, to increase public debt, and to cut valuable programs and services on the backs of Saskatchewan people then I guess it’s right. But these are not what I would call hallmarks of good financial management of public dollars.”