© Guardian photo by Brian McInnis
Finance Minister Wes Sheridan delivers his 2014 budget in Guardian file photo.
Sheridan offers little relief in strategy to hit elusive balanced budget by 2016
Finance Minister Wes Sheridan delivered as promised with a ‘Triple B’ provincial budget —bland, boring and below expectations. He promised a stay-the-course budget and that is what we have. The almost empty legislature public gallery and vacant AV room, normally jammed for a budget address, gave mute testament that little was expected.
The minister is adamant that he must stay the course to allow for balance by 2016 and then begin the painful process of paying down the debt. After seven consecutive deficit budgets, which saw the provincial debt pass the $2-billion figure, it is past time for the minister to get this province’s financial house in order.
Despite a projected deficit of almost $40 million for the coming fiscal year, Mr. Sheridan still insists he’s on the road to balance by the spring of 2016. In his defense, the minister had little room for financial maneuvering. Premer Robert Ghiz called it a tough but necessary budget.
In pre-budget public consultations, Islanders urged restraint on new spending and reduction in expenditures but not at the cost of jobs; to return to balance, but not through drastic means.
Mr. Sheridan said he had to spend to stimulate the economy in recent years to get through a worldwide, lingering recession. It paid off as P.E.I. led the way with growth of more than three per cent while creating 4,400 jobs. Improvements had to be completed to schools, manor, hospitals and roads.
Opposition Leader Steven Myers had little good to say about the document, claiming every Island household will pay, on average, $600 extra in taxes and fees this year. NDP Leader Mike Redmond was critical of the lack of social spending, saying Islanders are cold and hungry now, while the minister has delayed relief for two more years.
There are some “targeted investments” such as insulin pumps, flu vaccines administered by pharmacists, home care, seniors’ home renovations, help through public transit for Island patients going to Halifax and eye exams for preschoolers. Most of those programs are going ahead with help from civic-minded private citizens, companies or groups.
While we are on the topic of Islanders helping out, has the minister been keeping track of the expected benefits to Island businesses from HST rebates? It was hoped those rebates would result in additional hirings, plus reduced costs being passed along to Islanders. Is this happening and are businesses doing their share to ease the pain for Islanders? Or are savings simply being pocketed?
The Greater Charlottetown Area Chamber of Commerce voiced skepticism about Mr. Sheridan’s plans to hit balance by 2016 and suggested that improvements to the deficit this year and next cannot be credited to the province but to a reallocation in federal HST transitional assistance, an extra $20 million in federal equalization payments and $25 million in federal infrastructure funding. The chamber cautions that “more significant action by the province is required on expenditure reduction and revenue generation.” The chamber urged an agenda for economic growth includes job creation, increased business opportunities and immigration.
For the fiscal year just ended, there was a slight improvement over the budget target of a $58.9-million deficit, with a forecast deficit of $51.9 million. In the upcoming fiscal year, Mr. Sheridan predicts there will be a further reduction in the deficit to $39.7 million before achieving a small surplus in 2015-2016.
The return to balance by 2016 will happen only if the province is very lucky — with no extraordinary or unforeseen expenditures; that Mr. Sheridan’s optimistic forecast of revenues increasing 3.3 per cent this year and 3.5 per cent next year hold true; and that expenditures drop from two per cent to one per cent in the same time period. Good luck.