2020-21 Budget Supports People, Jobs And Economic Recovery

Released on June 15, 2020

The 2020-21 Saskatchewan Budget meets the challenges presented by the global COVID-19 pandemic.

“Saskatchewan is strong, our province’s fiscal foundation remains solid and our economy will recover,” Finance Minster Donna Harpauer said.  “Saskatchewan people are resilient and our province has what the world needs as the global economy recovers from the pandemic.

“Our government is helping support people through the pandemic and investing to stimulate our economy and create jobs.  Every province, every jurisdiction in the world has seen its economy and finances hit hard by the pandemic.  Saskatchewan is not immune, but we are better positioned than most to provide the support people need to get through the pandemic and see our economy recover and jobs return.”

The reduction in provincial revenues and additional costs related to the pandemic have resulted in a $2.4 billion deficit forecast for 2020-21.

“This is a pandemic deficit, not a structural deficit,” Harpauer said.  “Prior to the pandemic, Saskatchewan was on track for balanced budgets last year and this year, and I am confident that as Saskatchewan’s economy recovers, our revenues will also recover and we will get back to balance in the coming years without having to cut programs and services.”

While the 2020-21 deficit is significant, it is much smaller than the deficits expected in many other provinces this fiscal year.

Revenue is forecast to be $13.6 billion, down $1.2 billion, or about eight per cent from last year, a result of the shuttering of domestic and global economies to contain the spread of COVID-19, combined with the oil price collapse.

The 2020-21 Budget includes $16.1 billion in spending, an increase of $1.1 billion, or about seven per cent compared to last year.  This includes record spending on health care, which is vital during the COVID-19 pandemic.  The budget also invests strongly into many needed programs and services.

To help stimulate Saskatchewan’s economic recovery and create jobs, the province’s capital plan in the 2020-21 Budget includes a $3.1 billion investment to build hospitals, schools, highways, municipal and Crown corporation infrastructure.

Over the next two years the province will invest $7.5 billion as part of its capital plan, which includes $2.0 billion announced in May to help further stimulate the economy and create jobs.

“These are projects that will result in much needed economic activity and jobs,” Harpauer said.  “Saskatchewan is fortunate to be in a strong financial position to make these kinds of important capital investments in every part of our province.”

The 2020-21 Budget includes more than $1.0 billion in support to fight the pandemic, for individuals, for businesses and for initiatives to help the economy recover.

Investment in Saskatchewan People

Expenses of $16.1 billion incorporates the $14.2 billion outlined in the estimates for government ministries and agencies released on March 18.

As well, $1.3 billion in expenses from across other government entities is included in the summary budget, for a total of $15.5 billion, at that time.

In the ensuing weeks, more than $700 million has been allocated to address the challenges of the pandemic, and a $200 million health and safety contingency has been established.

This pre-pandemic level of funding includes a record investment of $6.18 billion for the health care sector, up $288 million or 4.9 per cent from the previous year’s budget.  While the health sector is incurring COVID-19 related costs, the significant year-over-year increase is, thus far, allowing the needed flexibility in the system to manage pressures within the existing budget.

Within this record investment, $118 million has been identified by the health sector in spending commitments related to hospital equipment, testing equipment, personal protective equipment and operating costs to address the pandemic.

The 2020-21 budget also includes a record $435 million in mental health and addictions funding, which makes up 7.5 per cent of the total Ministry of Health budget.

There is also $3.36 billion for education in this budget, including the pre-K to Grade 12 and the post-secondary sectors, up $79.4 million or 2.4 per cent from last year.  A $42 million increase in school operating funding includes $20 million to fully fund the ratified teachers’ collective bargaining agreement.  School divisions have been responding to the unique challenges of the COVID-19 pandemic including online learning and planning for the upcoming school year, with the guidance of Saskatchewan’s Chief Medical Health Officer.

This budget includes $1.49 billion for social services and assistance, a $58 million or four per cent increase, over the 2019-20 Budget.  It includes a $30 million increase for child and family services to enhance the range and delivery of services that keep children safe.  It also includes $10.9 million for third party providers that deliver services on behalf of the ministry to some of our province’s most vulnerable people, including at-risk children, youth and families, people with intellectual disabilities and mental health challenges.

In response to the pandemic, $6.4 million has been dedicated to a number of measures to address the province’s most vulnerable people, including one-time payments of $50 to all adults in receipt of income assistance.  Government is also providing $100 monthly respite payments from June through September to about 2,800 individuals caring for people with intellectual disabilities, at a cost of $1.1 million.  There is $171,000 for additional support to emergency shelters, and one-time $300 payments to foster and extended family caregivers.

The 2020-21 Budget provides more than $85 million to the Saskatchewan Public Safety Agency, which supports the province’s people, municipalities and service providers, and is positioned to address any emergency that may arise.  The agency has been fundamental in the province’s response to the pandemic, particularly in the north west region of the province, including La Loche and surrounding communities.

A number of other ministries and agencies have also re-purposed funding within their existing budgets to address pandemic impacts, bringing the total of COVID-19 spending within existing funds to $148 million.

Responding to the COVID-19 Pandemic

In total, the 2020-21 Budget now includes more than $900 million in new support to fight the pandemic.
This includes an additional $502 million of new expense forecast after March 18, for COVID-19 related support programs and economic stimulus.

The new expense includes:

• $171 million of new capital funding for third parties, including $150 million for the Municipal Economic Enhancement Program for shovel-ready infrastructure projects;
• $150 million for the Accelerated Site Closure Program for the reclamation of inactive oil and gas wells and facilities;
• $56 million for the Temporary Wage Supplement supporting those workers who are helping some of our most vulnerable in our province through the pandemic;
• $50 million for the Saskatchewan Small Business Emergency Payment providing support to small and medium-sized businesses that have had to temporarily close or significantly curtail operations because of the COVID-19 pandemic;
• $50 million in emergency pandemic support for First Nations and Métis organizations and community-based organizations to help offset an $81 million reduction in gaming grant payments resulting from the closure of casinos;
• $13 million for Canada Emergency Commercial Rent Assistance, providing forgivable loans to commercial property owners to assist with rent owing by small businesses experiencing hardship during the pandemic; and
• $12 million of other measures, including support for livestock producers, enhancements to the corrections and justice systems and the Self-Isolation Support Program.

Further, $205 million will be directed to government-owned capital assets such as schools, hospitals and highways, in addition to the original capital plan.  When combined with the $171 million increase in expense for third-party capital, a total of $376 million is provided for the first year of a two-year, $2.0 billion capital stimulus package.

A $200 million health and public safety contingency has been provided to address future pandemic-related expenses, such as a possible resurgence of the virus, later this year.

In addition to measures that are part of expense and capital, our government has committed an estimated $675 million related to deferrals for Saskatchewan people in this challenging time.  PST remittance deferrals, utility payment deferrals, Education Property Tax deferrals and the student loan repayment moratorium are among the measures the Government is taking.

Saskatchewan’s Capital Plan

Our government will invest $3.1 billion into infrastructure in 2020-21.  It’s the first year of an enhanced two-year $7.5 billion capital plan to invest in schools, hospitals, highways, Crown utility projects, municipal infrastructure and other needed projects to stimulate our economy, create jobs and build a strong Saskatchewan.  The plan received a $2.0 billion injection in May to further help our economy recover over the next two years.

The initial capital plan, announced in March, supports more than 17,500 jobs with an economic impact of $1.8 billion on nominal GDP.  The two-year $2.0 billion stimulus is expected to support 10,000 jobs, with a $1.2 billion impact on the province’s nominal GDP.  Saskatchewan has invested close to $34 billion in provincial infrastructure since 2008-09.  More details related to Saskatchewan’s Capital Plan can be found in the budget capital news release and backgrounder.

Increasing Competitiveness to Help Saskatchewan’s Economy Recover

“Strengthening Saskatchewan and helping our economy recover requires being competitive, keeping taxes low for Saskatchewan people and businesses, particularly in these challenging times while seeking new markets, growing trade and exports, as well as adding value to Saskatchewan products that are sold around the world,” Harpauer said.  “This budget contains a number of targeted tax measures, encouraging new activities in areas like pipeline development and fertilizer production.”

The 2020-21 Budget reintroduces full indexation of the Personal Income Tax system, beginning with the 2021 tax year—protecting taxpayers from bracket creep, or automatic increases in tax caused by inflation.  The government has also introduced a PST rebate for new residential home construction of up to 42 per cent of the PST paid on a new house contract up to $350,000, excluding the land, for new homes purchased after March 31, 2020 and before April, 1, 2023.  The new rebate will help the province’s construction industry, homebuilders, and associated trades to create jobs, and it will help Saskatchewan families to afford a newly built home.

The Oil Infrastructure Investment Program, a SaskFirst new growth tax incentive administered by the Ministry of Energy and Resources has been introduced to support new and expanded pipelines, as well as new pipeline terminals, to flow oil to markets.

The 2020-21 Budget also introduces a new Saskatchewan Chemical Fertilizer Incentive, providing a 15 per cent tax credit to encourage new investment that will grow Saskatchewan’s value-added sector.  The budget extends the existing Manufacturing and Processing Exporter Tax Incentive for an additional three years.  The tax credits provided under this incentive for new production and head office hiring helps to support efforts by eligible businesses to expand their production and export capacity.

To ensure growth of our export markets $4.2 million in this budget, through the Ministry of Trade and Export Development, will establish three provincial trade and investment offices in Japan, India and Singapore.  Officials in these offices will focus on diversifying markets, connecting Saskatchewan businesses with investors and customers.  They will encourage direct foreign investment, and give our exporters an advantage with people who understand the business culture, rules and regulations in key markets.

The 2020-21 Budget includes $5.0 million in 2020-21 to identify opportunities for irrigated agriculture in Saskatchewan, and further develop land and water resources.

Continued Investment into Communities

The 2020-21 Budget provides a record $278 million in Municipal Revenue Sharing—up nearly $27 million from last year, or 11 per cent.  In total, this budget invests more than $571 million in direct provincial support to Saskatchewan’s municipalities, an increase of $137 million, or 31.4 per cent, over last year.  This includes revenue sharing, and the $150 million Municipal Economic Enhancement Program, additional infrastructure funding, and a number of grants and initiatives from various government ministries.

Also in this year’s budget, an increase of $14 million will help fund the operations of community-service organizations that provide vital contributions—strengthening families and assisting those who are most vulnerable, particularly important as the province responds to the global pandemic.

“Our net debt-to-GDP is among the lowest in the country,” Harpauer said.  “We have the ability to invest in the priorities of Saskatchewan people.  Our people are strong, our economy is resilient and we have the solid base we need to bring our budget back to balance over time.  We will develop a plan to move forward.  We faced the pandemic, together.  Now we are re-opening our province, together.  And we will rebuild and recover together.”

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For more information, contact:

Jeff Welke
Finance
Regina
Phone: 306-787-6046
Email: jeff.welke@gov.sk.ca
Cell: 306-536-1185