Recap of the 2020-2021 Saskatchewan Provincial BudgetJune 17, 2020
On June 15, 2020, Minister of Finance Donna Harpauer presented the Province’s full budget for 2020-21 nearly three months after it was originally expected. Back in March 2020, Minister Harpauer was forced to postpone the formal reading of the Budget and instead announced the government’s spending plan, holding off on revenue projections because of the oil price collapse and the COVID-19 pandemic. The government is now forecasting a record-high $2.4 billion deficit. This blog post will provide a high-level overview of items in the Budget.
- Saskatchewan’s per capita case counts are nearly 80% below the national average
- Saskatchewan’s fatality rates are over 90% below the national average
- Saskatchewan has seen fewer business closures than other provinces during lockdown
Provincial Budget 2020-21 at a Glance
- Forecasted budget deficit of $2.4 billion – Revenue is projected to be $13.6 billion, down 8.3% from last year, while expenditures are projected to be $16.1 billion, up 7.2% from last year’s budget (65% is COVID-19 related).
- Public debt is expected to rise by $3 billion in 2020-21. Of this amount, $1.9 billion or 63% is attributable to COVID-19. Saskatchewan still has one of the lowest debt-to GDP ratios among all provinces and territories, along with an extremely high credit rating.
- Real GDP is projected to decline by 6.6% in 2020 but grow by 5.2% in 2021. Saskatchewan’s forecasted reduction in Real GDP is the third highest among the provinces after Alberta (-8.2%), and Newfoundland and Labrador (-7.5%).
- Capital investment in 2020-21 ($3 billion) represents the first year of an enhanced two-year, $7.5 billion capital plan, which includes an $2 billion economic stimulus booster shot announced in May 2020 to help the economy recover from the impacts of COVID-19.
- More than $700 million was allocated to address the ongoing challenges of the COVID-19 pandemic, while $200 million was allocated for a health and safety contingency plan designed to address a possible second wave of COVID-19.
- Budget 2020-21 commits $715 million to Highways and Infrastructure; $6.18 billion for healthcare (up 4.9% from last year); $435 million for mental health and addictions (7.5% of the total Ministry of Health budget); $3.36 billion for education (including pre-K to Grade 12 and post-secondary); $1.49 billion for social services and assistance (up 4% from last year); $6.4 million dedicated to vulnerable people like those on social assistance and the disabled; and $85 million for the Saskatchewan Public Service Agency.
- $4.2 million in the Budget will be used to establish three provincial trade investment offices in Japan, India, and Singapore through the Ministry of Trade & Export Development.
- Budget 2020-21 reintroduced full indexation of the personal income tax system beginning with the 2021 tax year. Full indexation protects taxpayers from automatic tax increases caused by inflation (bracket creep).
- In April 2020, the government introduced a PST rebate for new residential home construction of up to 42% of the PST paid on a new house contract up to $350,000, excluding land for new homes purchased after March 31, 2020 and before April 1, 2023.
- The Oil Infrastructure Investment Program is a new tax incentive administered by the Ministry of Energy and Resources and will support new and expanded pipelines, as well new pipeline terminals to flow to markets.
- Budget 2020-21 introduced the Saskatchewan Chemical Fertilizer Incentive that provides a 15% tax credit to encourage new investment to help grow the value-added sector.
- Tax revenue for 2020-21 is forecasted at $7.2 billion, a decrease of 4.6% from 2019-20. The largest declines were in the PST (retail store closures) and the Fuel Tax (less travel).
- The unemployment rate is expected to average 8.6% and average employment is expected to fall by 15,800. In Saskatchewan between February and May 2020, total employment declined 10%. The largest changes in Saskatchewan employment by industry were in accommodations and food services (-15.5%); wholesale & retail trade (-8.2%); and information, culture, and recreation (-8.1%).
Overall, the SCC believes that Provincial Budget 2020-21 strikes a balance between what needed to be done around COVID-19 and what should be done in terms of investing in long-term resiliency measures.