Drop in potash revenue pushes Saskatchewan to dip into rainy day savings
REGINA - The Saskatchewan government is dipping into its rainy day fund to pay the bills and warning of belt-tightening in the upcoming budget.
In its third-quarter budget update released Friday, the province said a drop in potash revenue means it will have to take $135 million out of its savings to offset the shortfall in its general revenue fund.
"When you plan for non-renewable resource revenue to be a specific number and then the potash industry crashes because of things that are occurring in Russia and in Belarus, and we end up with $179 million less in potash revenue, those are things that are out of our control," Finance Minister Ken Krawetz said Friday.
Potash is a mineral used primarily as fertilizer. Saskatchewan collects billions in tax and royalty revenue from companies that mine the resource.
But demand for potash softened and prices fell last year after Russian-based Uralkali, one of the world's largest potash producers, quit an export partnership.
The Saskatchewan government said potash revenue is expected to be down $179.1 million from the budget estimate last March.
The budget estimate was for $11.6 billion in overall revenue and $11.5 billion in expenses â€” leaving a thin surplus of $64.8 million.
But the third-quarter update predicts the government will now spend more than it takes in.
"As I've always said, the operating side is our chequing account. That's where we receive revenues and we pay for expenses," said Krawetz.
"We've always said that on any given time we may have to utilize our savings account, our rainy fund as it's referred to, and I said that when I delivered the budget in the spring."
Krawetz said there were extra expenses in part because of disaster assistance to deal with flooding last year.
But New Democrat finance critic Trent Wotherspoon criticized the government's financial management.
"In the 11th hour of this year again, they're back to the rainy day fund, dipping into those funds to rip out over $100 million. Certainly, households across Saskatchewan can't run their finances like that," Wotherspoon said Friday.
The government said it's still expecting a surplus of more than $400 million on a summary basis.
Summary accounting factors in all areas of government, including more than 270 Crown corporations and other agencies controlled by the government. Several provincial auditors have said the government should only report on a summary basis because two sets of books are confusing for the public.
The Saskatchewan government is scheduled to table its next budget March 19.
Premier Brad Wall was already trying to manage expectations last December. Krawetz echoed those comments Friday.
"Belt-tightening is always essential," said Krawetz. "And as we look around the nation, as we see provinces that are struggling to try to get back to a surplus position, here in Saskatchewan we've been fortunate. We have had a surplus and we will continue to tighten the belt to make sure that we are operating within our means."
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