Thursday, March 22, 2007

Saskatchewan budget 2007

The Calvert government is continuing to build a dismal balanced budget record by introducing it's fourth deficit budget in the past six years.

This time, the forecast deficit is $700 million. Saskatchewan is now the only province in western Canada currently running a deficit and one of the few remaining deficit provinces in the country.

All this when revenues, forecast to approach $8 billion, are higher than ever.

The government has created a budget that, for all intents and purposes, dooms the province to years of increasing debt.

Every budget envelope has been stuffed to capacity. Health spending is up another $300 million this year.

They've found money for a prescription drug plan for seniors, even though most of them are doing well enough on their own. There already is a program for low-income seniors. This is a blatant vote buy -- pandering to the Tommy Douglas generation.

They've found money to offer a substantial tax cut for recent graduates of post-secondary programs. The program effectively increases the basic personal exemption for grads to $20,000 per year for five years. What about that guy who had the terrible misfortune of graduating last year? The new guy in the next cubicle is $5,000 richer than him.

The rest of us pay high taxes to subsidize education to the tune of 80 per cent, subsidize the student loan program, and now work hard so philosophy grads can wait tables tax-free for five years.

Oh, did I mention they are running a $700 million deficit this year?

PS: For perspective, this may be the largest deficit since you-know-who.

UPDATE: Just heard Finance Minister Andrew Thomson say on CJME that "That's what the Fiscal Stabilization Fund is for -- to help pay for tax cuts."

First off, the premise of this statement is false. The government doesn't need "help" paying for anything. Government revenues are higher than they ever have been.

Second, that is NOT what the stabilization fund was intended to do. It was meant to help cushion against sudden drops in revenues due to fluctuations in resource prices.

The government has been saying this for years, and Thomson's own web site clearly lays out what the FSF is for.

Short-term drops in revenue and exceptional expenditures lead to pressure for tax increases and program reductions, which may be inappropriate over the long-term. A fiscal stabilization mechanism helps governments pursue long-term objectives in the best interests of the public by reducing the pressure for stop gap solutions to short-term volatility.

It has always been a rainy day fund. Who's lying now, Minister?


leftdog said...

Here is what the BANK OF MONTREAL said today of Saskatchewan's Budget:

"The Province of Saskatchewan is projecting its 14th consecutive balanced budget for 2007-08. The $75 million surplus in the General Revenue Fund follwans an estimated $70 million balance in 2006-07."
Bank of Montreal
BMO Capital Markets
March 22, 2007

I think I believe the Bank of Montreal BEFORE I believe those who want to paint this as a deficit budget.

The Bank of Montreal is unbiased whereas the Official Opposition is Saskatchewan has a political reason for wanting to paint this budget negatively.

Bravo to the Bank of Montreal for their expertise, critical analysis and honest appraisal of this budget.

leftdog said...

And just to add weight to the Bank of Montreal's arguments:

By using a closely controlled fiscal stabaliztion fund, it allows them to draw from reserves in a predictable way where NO debt has to be incurred. Without the retained earnings to draw down, you are correct, they would have had to borrow and that is what CA's consider a true deficit - because it incurrs debt.

David, if you plan for expenditures next month by retaining $100 of this months money and expending it in next months expenditures, then you did not have a $100 deficit next month NOR did you incur new debt ... you planed to spend retained earnings from 'this' month, 'next' month - that is prudent, planned and the BOM likes it!

Banks and economists like it also. Right wing political partys like the Sask Party hate it ....

David MacLean said...

Reminds me of how the Mulroney tories used to say they were running a "structural surplus."

lance said...

The BMO is wrong.

The Dept. of Finance explicitly states that this is a $701M deficit in the budget.

Is LD going to next claim that Finance are shills for the Sask Party?


leftdog said...
This comment has been removed by the author.
leftdog said...

I have been searching news releases from ALL Canadian chartered banks and
I will shortly be posting a number of other GLOWING reports on Saskatchewan's Budget from other Canadian Banks.

Lance - my apologies to you for my earlier abrasive post. I have deleted it.

Spakosky said...

Isn't the BMO simply repeating the propaganda coming from Thompson without any analysis if their own?

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