The government of Saskatchewan took taxpayers on a fiscal roller coaster this last year.
Saskatchewan’s 2023 budget predicted a $1 billion surplus. The third quarter report projected a $483 million deficit. And now, the newly released end-of-year public accounts show a $182 million surplus for last year.
The government is calling this result an “operating surplus.”
But taxpayers should do a double take before they offer the government any praise for its fiscal management.
Because things are not as they seem – an operational surplus is not a real surplus. Instead, it’s a bureaucratic way of saying that the government is still increasing the provincial debt this year.
In other words, it’s a fake surplus.
If you ask anyone other than politicians what it means when you have more debt than last year, surplus is not a word that would come to mind.
At the end of 2022, Saskatchewan’s debt was about $18.5 billion. At the end of 2023, the debt was $19.2 billion. That’s an increase of more than $700 million. Does that seem like a balanced budget to you?
Now, the government will likely say that this debt is different because it’s an investment being used to build highways, schools and hospitals.
That’s nonsense.
When a farmer or a small business owner takes out debt to invest in more land or new equipment, they do so because it will help them make more money in the future. And, in the worst-case scenario, they can sell those assets if things don’t go their way.
But that’s not the case for the government. The government can’t easily sell an old school or hospital or sell miles of highway to pay off the debt. All of these things come with more maintenance bills than financial returns on investment.
The government could spend on these projects without increasing the debt by being fiscally prudent. Instead, the government is spending more money on everything.
The government overspent its own budget by $2.2 billion last year. Out of the 11 main spending areas of the government, it exceeded its budget on every single line item. Going over budget on one thing might be due to circumstances. Going over budget on everything is a lack of financial discipline.
The government also saw a $1.3 billion increase in revenue compared to last year’s budget. That includes an increase of more than $1 billion more from Saskatchewan taxpayers.
If the government had kept spending on budget, Saskatchewan would have a real $2.3 billion surplus for last year that could be used to pay down debt, not the fake surplus it recently presented.
When the government makes a budget, it needs to stick to it. A budget is supposed to be a rigid plan for the upcoming year, not some rosy picture of what could have been. Prudent Saskatchewanians plan their household budgets to put some money away every year; it’s reasonable to expect the government to do the same.
The government’s latest budget for 2024 projects a surplus next year, but it also predicts that the province will continue to rack up the debt. By the end of this year, the debt will be $21.1 billion, or $17,309 per Saskatchewanian.
The budget also projects that the government will continue to rack up debt in the future. By the end of 2027, the debt will reach $28 billion.
This is not a new problem for the government. For years, it has been failing to balance the budget. Over the last decade, it has increased its debt by 227 percent, and interest payments on the debt have increased by 164 percent.
Over the same decade, the Saskatchewan government wasted $4.7 billion taxpayers’ dollars on interest payments. That’s more money than the government plans to spend on education this year.
Taxpayers should be relieved that last year’s books aren’t as bad as they seemed. But they’re not nearly as good as it should be. The government must stop spending so much and get back to real balanced budgets – not fake surpluses.
Gage Haubrich is the Prairie Director for the Canadian Taxpayers Federation.
