© Guardian photo by Heather Taweel
Finance Minister Wes Sheridan
P.E.I.’s deficit for last year has come in $13-million less than expected, according to the audited financial statements for the province released Friday afternoon.
P.E.I.’s public accounts, better known as the blue books, show exactly how much money was actually made and spent every year, once all the final revenues have been tallied and bills have been paid.
The 2013-14 public accounts show the province’s deficit last year came in at $45.8 million, which is $13 million less than the $58.8 million deficit government budgeted for 2014.
Finance Minister Wes Sheridan says this is good news in the province’s march toward a balanced budget.
“This is a continuation down, this has been the third year of our deficit going in the right direction,” Sheridan said.
The main reasons for this improvement are increases in personal income tax revenues and an accounting change involving a $39 million HST transition payment from the federal government. This accounting change was debated at length last fall in the legislature when it was revealed that $25 million of this HST transition payment had to be moved out of 2013’s books and into 2014’s. That change is reflected in the blue books released Friday.
As for why personal income taxes were up, Sheridan says this is a sign that more Islanders were earning an income and also a reflection of P.E.I.’s increased population rates through immigration.
This public accounts document also includes the first full year impact of the HST since it was implemented in P.E.I. in April 2014. It shows the harmonized sales tax brought in a total $32 million in new tax revenues for the province.
The document also includes an additional 25-page analysis of the reforms made in 2014 to the two civil services pension funds.
These changes eliminatedguaranteed indexation of pension benefits and moved to a career average for calculation of pension benefits, among numerous other changes.
This pension fund overhaul led to a delay in the release of the public accounts documents. By law, they must be tabled by Jan. 31 of the next fiscal year. The 2014 document barely made it under the wire, with last minute changes being made until close to 5 p.m. Friday – the last business day before the legislated deadline.
The Guardian and the CBC were shown draft versions of the documents in advance, to enable interviews with Sheridan before the end of the business day.
Opposition Leader Steven Myers noted the last minute release of this document as“unusual and downright bizarre behaviour “ for a finance minister “with one foot out the door.”
“To be cherry picking spin from draft financial statements on the last business day before his deadline to produce audited financial statements shows how far the wheels have fallen off the bus,” Myers said.
“All Islanders should be concerned at the arrogance and lack of transparency this government is showing taxpayers.”
The Ghiz government added $60 million to the provincial debt in 2014, according to the audited figures. That brought the net debt to just shy of $2.1 billion.
But Sheridan pointed to a slight drop in the debt-to-GDP ratio of less than one per cent.
He says this is good news for the economy and is especially good news for P.E.I.’s bond ratings.
“If the ratio is declining, growth in the economy is exceeding growth in net debt, resulting in improved sustainability,” the public accounts report states.
But with a balanced budget on the horizon, don’t expect a return to days of big spending announcements.
Balance will only be achieved with continued restraint, despite the fact virtually all government department budgets have been frozen for the last three years.
Sheridan calls this the “new fiscal reality” and that reality is not likely to change anytime soon.
“Has it been tough on departments? Yes it has been. They’ve had to do a lot of work on attrition… and each department has to rationalize and decide what’s important on the front lines to Islanders,” Sheridan said.