Wednesday, March 20, 2013

Saskatchewan Budget Day

Well, it was Budget Day here in Saskatchewan and everyone is stopping to take a moment and examine the budget and the details that it contained. I've said before on the blog that financial policy isn't one of my strong suits, so hopefully I've managed to examine this information correctly.

There were some silver linings to the budget, including a bit of a swell into health care spending (though there is room to debate whether spending on reducing surgical wait times and rural doctor recruitment will pay off) but the bulk of the budget was mostly on the disappointing side.

There's a few things to highlight here, so let's get to it.

We'll start with education. Although there is a modest increase in direct funds, and the promise of $17 million to school boards that are seeing student increases, the budget fails spectacularly on the subject of education. One massively under reported aspect of the budget has been the massive change to Education Property Tax Mill Rates. The agricultural rate is dropping from a little over 3.91 to around 2.67; while the residential rate is dropping from 9.51 to 5.03. The biggest decrease comes in the industrial/commercial rate and resource rate, which is collapsing from three categories into a single rate of 8.25 and 11.04 respectively.

The budget document says that this cut is intended to be revenue neutral, but I just can't understand how that is possible given the major decrease in the two commercial based rates. And while it may actually manage to be revenue neutral for taxpayers for the 2013 year, it doesn't address the cost impact it will have on schools, both for 2013 and the years to come.

On the subject of post-secondary education, the picture is a little more grim. Both the University of Regina and University of Saskatchewan received less than half of the 5% increase they were hoping this budget would deliver. This further guarantees that these institutions will have to continue with program cuts, staff layoffs, and major increases in tuition rates.

The silver lining here is that SIAST is lined up to receive some increased funding, but one does wonder whether or not it will create a positive impact and generate more seats for programs across the province.

The other issues with regards to education revolve around the floating notion of P3 (Public-Private Partnerships) being used to build new schools. The thought stops short of proclaiming that Saskatchewan will be populate with private schools/academies/word of choice; effectively creating a two-tiered education system in the province, but one does have to wonder what a P3 would accomplish in terms of education.

Either way, in the long term, the use of P3's would put all of the risk and debt onto the public books while allowing the private side to prosper (much like the AMICUS agreement in Saskatoon),

The other thing we need to talk about is the way our totals have been calculated. At first, we had a $150 million shortfall in this budget. Then $180 million from the Crowns later and we have a balanced budget.

Now, I can't deny that the NDP did the same thing in office. They used the Crowns and the Rainy Day Fund to balance out a little (though the NDP never really were too far off the mark, and definitely didn't misread oil/gas and potash revenues). I'd also point out that the NDP didnt ravage the Crowns as much as we've seen from this government; can anyone else remember a time when a Crown had 100% of their revenue taken in a single year? The government also used GRF (General Revenue Fund) totals instead of SF (Summary Financials) in order to paint a rosier picture. Of course, everyone is pointing out how the NDP did the same when in power.

Though, I would also note on that front that GRF reporting was still the norm in Canada when he NDP was last in power and now Saskatchewan is the only province still using GRF reporting. Simply saying we're doing it the way the other government used to doesn't fly as an answer, or a justification, since times and methods have changed since then.

So, ultimately, we continue to not have a balanced budget under this government. Not to mention the fact that this is a government, like all right of centre parties, that extols the virtue of buying now and paying much later (in fact, leaving the cheque for the next generation.)

One positive was that we didn't see the 2% corporate tax rate reduction that was touted prior to the budget, though we did see changes in the uranium royalty system that will likely result in lower profits for the province in regards to uranium; the budget says the steps being taken will result in increase production and quotes $5 billion over 14 years with potential new investment (key word on 'potential' as the number could be significantly lower if investment does not meet expectations).

As stated, the budget fails on a number of levels, and despite a few silver linings it ultimately does nothing to ensure long term financial prosperity for the province. When the Saskatchewan Party was first elected, there was billions left by the Calvert Government. From the looks of things, the next government will have to start completely from scratch.

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