There have been dire predictions made about the Liberal government bringing the province to the brink of financial ruin, but are the critics right?
Jim Sentance, the economics chair at UPEI doesn't think so.
Sentance said P.E.I. is a have-not province so its finances are never going to look great and there have been several factors that haven't helped, such as the recession and changes to the federal equalization structure.
He agrees with Finance Minister Wes Sheridan's assessment that transfer payments are not the same as they were in the past because of changes to the formulas.
"He's right. That has happened and that's been a significant hit," he said.
The Liberals projected a $42.3 million deficit in their first budget, which they said was because the previous PC government overstated its revenues.
It has produced deficit budgets ever since, including one in the spring that projects a $42 million shortfall.
The Liberals have also added about $500 million to the provincial debt, which will reach more than $1.8 billion by the end of next year.
Sentance said one indicator of the state of P.E.I.'s finances is the debt to gross domestic product ratio, which was 41.1 per cent last year and took a large jump after going down for several years.
While that is a concern, there are other provinces that have higher ratios, he said.
"It's not to the point that we're in emergency territory."
Sentance said the province's debt financing costs as a percentage of the budget have dropped for most of the time the Liberals were in power and is almost at a historic low.
The danger is when the debt service charges start to impact on the province's ability to pay for things and the province managed under previous governments when the interest bite was much higher, Sentance said.
"They managed that level of debt payment without too much difficulty."
For Sentance, the trend the province has been on for the last few years is one he said it can't maintain for a long period of time, but deficits were necessary to get through the recession.
"There was no way they could have avoided deficit budgets over the last few years," he said.
Sentance said the Liberals have a plan to lower capital spending as well, which was a big part of the debt increase.
He also thinks the plan to balance the budget by keeping spending increases below the rate of increases in revenues is better than some of the plans he's heard in other jurisdictions.
"A bit of spending restraint and that should be doable in a few years," he said.
Sentance cautioned things could change if there is a double-dip recession, which would lead to a drop in revenues.
"If that happened that would probably delay balancing the budget," he said.
His assessment of the Liberal government's financial management was in line with what Bank of Montreal's chief economist Sherry Cooper said in June when she disagreed with the notion the government was spending its way to bankruptcy.
Bond raters Standard & Poor's and Dominion Bond Rating Service both maintained P.E.I.'s ratings this summer and were generally optimistic about the province’s finances.
Sonya Gulati, a TD Bank economist who specializes in regional finances, said all of the provinces had to deal with the same challenges, but P.E.I. Liberals outlined a plan to reach a balanced budget.
“I wouldn’t necessarily say things are out of control,” she said.
The debt as a portion of the GDP is high compared to other provinces and because the province is small it has limited revenues, she said.
There are challenges ahead, such as a reliance on transfer payments and a need to restrain health spending and Gulati said the government needs to review how it spends money.
“A careful review of program spending is certainly a must.”
Conservative think tank the Fraser Institute was more critical of Ghiz’s track record and ranked him last among provincial premiers for his fiscal management.
Former B.C. premier Gordon Campbell ranked first on the list that included several people who are no longer in office, including former New Brunswick Shawn Graham who has been out of office for almost a year.
Graham ranked seventh.
The Fraser Institute gave Ghiz an overall score of 27 out of 100 for his performance based on government spending, taxes, and debt and deficits from 2007-2011.
Some premiers were evaluated for longer periods of time while others had shorted periods, such as Manitoba Premier Greg Selinger who was only evaluated for 2010-2011.
Ghiz scored highest when it came to government spending and debt and deficits for both of which he ranked seventh.
He ranked ninth for taxes because P.E.I. had some of the highest corporate and personal income tax rates.
What a nasty unfounded comment. Olive Crane has plans to strengthen the economy - why don't you educate yourself? Good governance will take care of much of it. Under the Ghiz team hundreds of millions of dollars have been squandered or directed to a chosen few and you're worried about 20 mil? (20 mil btw is the estimated cost of cutting PST by 1% which is what Ms Crane has said - I wouldn't call that cutting so heavily. An additional 1% IF we can afford it) You may not be the individual who should be assessing other peoples' intelligence. Give Olive a chance. Vote PC