P.E.I.’s Liberal government is in spending mode as it tabled its second consecutive balanced budget Friday.
After finishing the last year with a $1.2-million surplus, Finance Minister Heath MacDonald’s latest budget expects that to improve slightly to $1.5 million for 2018-2019.
MacDonald said the government has been fiscally responsible and holding the line as it tried to grow the economy over the last several years.
“We think it’s time as a government to give back,” he said.
Despite the surplus, the province’s net debt continues to grow and is expected to reach $2.26 billion in 2018-2019.
More than $86 million in increased revenues over 2017-2018 mean the province has some flexibility to spend thanks to higher tax revenues and more money from the federal government.
Islanders will be getting a few tax breaks this year, including an increase to the basic personal amount for income tax.
This year will see the amount increase by $500 with a further increase of $500 in 2019.
The government says that change will see about 2,200 Islanders no longer having to pay provincial income tax.
“We see the benefit in personal tax exemption,” MacDonald said.
Islanders will also be getting a break on their power bills with the government rebating the provincial portion of the HST on the first block of electricity, which the government says will save Islanders an average of $120 per year.
GOVERNMENTS OWN BUDGET HIGHLIGHTS PACKAGE
Anyone who uses propane, firewood or wood pellets to heat their homes will also get a rebate on the provincial portion of the HST.
Some businesses will be getting a break too with the government reducing the small business tax rate by 0.5 per cent and planning to reduce it further in the future.
Post-secondary students will be getting more help to pay for school with everyone who gets their first degree from UPEI and Maritime Christian College getting an extra $3,600 under the new Island Advantage bursary.
Island students who attend those schools will also receive $2,200 for each year of a four-year degree.
Holland College and College de L’Ile students will get an extra $1,200 for their first diploma.
The government expects the announced funding combines with existing supports will mean more than 1,000 qualifying students will get free tuition.
This year’s budget includes $5.3 million to support up to 400 childcare spaces and provide support funding for families.
There will be 19 teachers added to the school system this year, 32 new educational assistants and two school psychologists along with several other positions.
MacDonald said there won’t be any positions lost to pay for the increased spending.
“There’s no shedding in the budget,” he said.
UPEI will be getting support to create a psychology doctorate program to help increase the number of psychologists in the province.
Another $4 million will fund mental health and addictions supports and a new mobile mental health crisis program will be established.
Those mental health supports are part of $32.5 million in new health-care funding.
One thing missing from the budget was an estimate of revenues from carbon pricing, which MacDonald said hasn’t been determined yet with negotiations between the province and the federal government ongoing.
“We weren’t prepared to put anything in the budget when it wasn’t relevant to the outcome,” he said.
The government also isn’t expecting to make much off legalized cannabis with projected sales of $7.5 million, but no expected net revenue after the associated costs.
A cannabis tax is expected to bring in $623,000.
MacDonald said he doesn’t believe there will be much revenue out of cannabis sales in the first three or four years after it is legalized until it becomes “normalized.”
“I think it’s going to take some time,” he said.
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Highlights of the 2018-19 budget
- Balanced budget for the second year in a row with a $1.47 million surplus
- An increase to $1.985 billion in total revenue
- An increase to $1.983 billion in total spending
- $265,558 million spending for Education and Early Learning
- $710,446 million heath care spending (a $32 million increase)
- Free tuition for more than 1,000 low-income college/university students
- Up to 1,000 new low-income housing units
- 400 new childcare spaces
- HST rebate (provincial portion) on residential residential electricity, firewood, propane and pellets
- Basic personal tax exemption increase of $1,000 over two years
- 100 new private nursing home beds over the next two years
- Up to $2,500 a year in savings in small business taxes (0.5 per cent tax rate cut)
- $51,100 (including salaries) to create an Office of the Public Interest Disclosure Commissioner
- $623,000 in revenue from a Cannabis tax
- Net debt projected to increase to $2.26 billion (from $2.20 billion) with $127 million in debt interest
