The Saskatchewan government has more money and it’s spending more money, but the story goes deeper than the picture presented by the latest mid-year budget update.

 

The bigger picture shows politicians are planning a parade for next year’s projected balanced budget and it’s worth remembering the party will be almost completely paid for by dramatically higher bills for taxpayers.

 

First, here’s the snapshot of Saskatchewan’s mid-year financial update.

 

The operational deficit is now projected to be $348 million. That’s a few million dollars under budget, but it’s higher than the government projected this summer. The reason is simple and predictable.

 

Revenues were rising a few months after the budget came down. Resource revenues alone were projected more than a hundred million dollars higher. A balanced operational budget looked almost within reach after the first quarter.

 

But spending started to rise. As of mid-year, five of 11 major spending categories are over budget. Only two are under budget (community development is down due to delayed projects; and, interest payments are down because of actuarial projections on some pension funds). There are, of course, reasons for some of these budget overruns, such as forest fires, but the net result is inescapable: even though revenues are rising, spending is rising almost as much.

 

The current snapshot also illustrates a bigger trend and it’s worth looking back to see where we came from.

 

The operational deficit was $806 million at the mid-year update just two years ago. That’s more than double the current deficit. That’s the sort of thing the government likes to make into a graph and share on Facebook.

 

That’s despite the increased cost of managing the growing debt. Two years ago, the province projected interest payments on the provincial debt would be $292 million. This year, the province is projecting to pay $644 million. That number will continue to rise until the debt starts going down.

 

Yet the operational deficit is smaller, so what changed in those two years?

 

Saskatchewan’s still-struggling resource sector is shakily recovering. Government resource revenues in this mid-year update are up $286 million over the update two years ago. That’s a significant increase of more than 20 per cent.

 

Here’s the big factor: the PST hike. Saskatchewanians will pay nearly $971 million more in PST this year than they did two years ago. That’s a soaring increase of more than 80 per cent. It’s three times more than the federal government plans to collect from Saskatchewan by imposing the carbon tax.

 

Consider a quick hypothetical. If resources revenues weren’t up and the province hadn’t jacked the PST, this mid-year update would project an operational deficit of $1.6 billion – double the projection of two years ago. In other words, the main reason the Saskatchewan books look better is because the province has taken more from taxpayers.

 

That’s not how it was supposed to be. Balancing the budget was supposed to be a shared burden. The government swore it had learned its lesson about spending. And, while it deserves some credit for holding budget increases to more moderate levels, promises of transformational change accounted for few savings. Further, promises to reduce compensation for the bureaucracy came without practical implementation plans.

 

Saskatchewanians deserve better. Taxpayers have had to find ways to trim their family budgets to pay for higher taxes; the government must trim spending as well. Past booms and busts have taught us the irrefutable lesson that Saskatchewan must stop immediately spending every dollar of resource revenues and this province desperately needs a heritage fund to save some of that money.

 

A balanced budget will be a big accomplishment and the first step to getting the debt going back down, but we shouldn’t forget how the province is getting there: through the wallets of Saskatchewan taxpayers.