The provincial deficit has grown $4.7 million in seven months, despite a plan by the P.E.I. government to eliminate the deficit by 2015.
Finance Minister Wes Sheridan presented an update of the province’s finances Thursday, which show the current deficit is now projected to be just under $80 million. This is almost $5 million more than the $74.9-million deficit projected in the government’s spring operating budget last April.
Sheridan blamed this increase on the hot sunny weather this summer, which led to lighter yields of potato crops. This means farmers will likely be drawing higher than expected crop insurance payments later this year.
“Any budgetary plan has to have some flexibility to deal with unforeseen events,” Sheridan said.
“We have put a little bit more into the agricultural insurance … to ensure that if there is (crop) failure, we want to be accounting for it,” Sheridan said.
The department will not know exactly how much will be needed to supply the crop insurance fund until mid- to late December when the deadline for farmers to apply for coverage hits.
In the meantime, the department has estimated the insurance fund will need an additional $8 million to meet the need.
Without this extra payment, Sheridan says he would have come in under budget due to additional savings that have been found.
“This year was one of those years that we are expecting that there is going to be a need so we wanted to ensure those numbers are there … and of course we’re going to strive to find that last $5 million to come in under budget at the end of the year.”
But Opposition finance critic Steven Myers said the increase in the deficit demonstrates his belief the government will not successfully balance its books by 2015, as promised.
“This is a government that can’t hit any of their targets and they never have, so this is just another example,” Myers told reporters.
He said Sheridan is merely blaming farmers for his own financial woes.
“It’s the wild spending of this government, it has nothing to do with farmers,” Myers said.
In addition to the crop insurance losses, tobacco tax revenues came in $2.5 million lower than expected, which is another strain on the budget projections.
Health-care and social services expenditures also continue to be fiscal pressures, the minister said, specifically the added costs for in-province physicians, out-of-province hospitals and the disability support program.
On the positive side, Sheridan said departments are closely monitoring all expenditures and reducing costs where possible, so total expenditures are tracking below budget.
He said one key area where savings have been found is in the current historic lows in interest charges on debt.
“We are enjoying some incredibly low interest rates and some of that is down as low as one per cent on short-term money. So there’s money being saved in there,” Sheridan said.