Despite months of assuring Islanders the province’s books will be balanced by 2015, Finance Minister Wes Sheridan is now saying he will have to cut an additional $30 million spending this year to meet this target.
This $30 million would be on top of expenditure cuts already scheduled for this year to bring the current $80 million deficit down to $34 million, as per Sheridan’s plan to return to balance by 2015.
Now, Sheridan says he will ask Islanders whether they would rather push back the date of returning to balance by another year.
“I want all Islanders to have a say. If they indeed say this is the most important thing to them, we’ll go forward with further reductions,” Sheridan said.
“But what I heard last year is that they want a very balanced attack with more revenues and less on the expenditure side.”
This is the second time Sheridan has pushed back his deficit elimination date. The finance minister told Islanders in 2010 he would balance the budget by 2014.
He then re-adjusted this last year, laying out a three-year plan to return to balance by 2015.
As part of this plan, government was expecting revenues to grow by 3.4 per cent last year and 4.6 per cent during this fiscal year.
Sheridan characterizes those as moderate growth estimates, yet even so, they are proving to have been too high.
“Unfortunately we just haven’t seen the revenues grow the way we’d hoped. This is a national and international problem,” he said.
He pointed to seven other provinces that have recently announced a similar need to push back their deficit elimination targets, including oil-rich Alberta.
“Just like every other province in Canada, we’re seeing a lot of pressure on our revenue source.”
That’s why, although the province froze spending in every department except health last year and planned further spending cuts this year, returning to balance by 2015 would mean a further $30 million in spending cuts to make up for those lost revenues.
“That’s a lot of money… but it’s feasible. It just means that Islanders have to be ready for a little more change than we ever projected.”
But Sheridan said he would wait to see what feedback he gets in his upcoming pre-budget consultations to see whether Islanders would prefer to simply push back the balance date.
Opposition finance critic Steven Myers says he is not surprised Sheridan is once again adjusting his numbers.
“Every year that moves on, they move out their budget targets,” Myers said.
“This government has a spending problem and it’s obviously causing us to go further in debt every day and it’s not fair to Islanders. He’s passing the buck to them.”
He pointed out the province is implementing the HST in April, which is expected increase tax revenues by $25 million this year. Also government increased provincial fees this year, which was expected to bring in an additional $7.2 million in revenues.
“I think Islanders are doing their share and I think it’s time that government do theirs… they need to stop silly spending on things like Plan B, like the Holman Grand, like 2014.”