CHARLOTTETOWN, P.E.I. — P.E.I.’s government is seeing another higher-than-expected surplus this year, to the tune of $13.8 million.
On Wednesday, Finance Minister Heath MacDonald released a forecast for the third quarter of the province’s 2018/19 fiscal year. The province’s surplus has grown substantially from the $1.5 million initially budgeted for this fiscal year.
In a fiscal update released last fall, the surplus was revised to $4.4 million.
Like last fall’s update, officials from the finance department say higher-than-anticipated revenue from corporate income tax, sales tax and personal income tax has contributed to the growing surplus.
Revenues have increased by close to $39 million more than budgeted, while expenses have increased close to $27 million more than budgeted.
MacDonald said the numbers were a sign that the Island’s economy remains strong.
“It is no surprise that P.E.I. is projected to lead the country when it comes to economic growth in 2019,” MacDonald said.
Click here to read the full economic update
The Conference Board of Canada has previously stated that the Island will have the highest GDP increase in the country this year.
MacDonald said the increase in revenue, brought about by strong economic growth in almost every sector, has allowed the current government to spend more on social programs, such as affordable housing initiatives and health care.
Expenditures for Health P.E.I. are over $9 million more than initially budgeted, due partly to the addition of new medication to the drug formulary, the opening of 50 more private long-term beds and the addition of walk-in clinics, MacDonald said. Expenditures for Family and Human Services also increased by close to $7 million due to increased social assistance payments.
The province’s Agricultural Insurance Corporation is expected to see a loss of $16.1 million due to the difficult growing conditions last summer. This figure is up from $13 million from the fall fiscal update.
At a glance
P.E.I. is projected to collect more tax than budgeted this year, including:
- $10.3 million more income tax than anticipated
- $11.6 million more corporate tax than anticipated
- $8.5 million more sales tax than anticipated
Green finance critic Hannah Bell questioned a pattern of higher-than-expected tax revenue in recent budget updates by the MacLauchlan government.
Corporate tax revenues, in particular, have been consistently underestimated over the last three budget cycles. Between the 2015/16 and 2017/18, the province collected more than $76 million more in corporate taxes than budgeted.
"It's great that we've got surpluses continuing to exceed expectations, but honestly it raises some question about the quality of the budgeting," Bell said.
"There is a continual underestimation of tax revenue.”
Bell also said she was concerned most Islanders were not seeing the benefit of the booming economy.
"We also have the lowest average weekly wages. Our strong economy may be helping to fund election promises and program shortfalls, but it's not helping the average working Islander," she said.
The Guardian reached out to members of the Progressive Conservative Party for reaction but did not hear back by deadline.
Overall, employment growth was up 3.1 per cent in P.E.I. in 2018, although unemployment stood at 9.4 per cent. Average weekly wages increased by 2.2 per cent last year but are still the lowest in the country. Housing starts were up 19.9 per cent, led by an almost 40 per cent growth in multiple unit dwellings.
However, it is unclear how much of this growth in multi-unit dwellings were in the rental market. Rental vacancy rates remain extremely low at 0.2 per cent in Charlottetown and 0.9 per cent in Summerside.
