A drop in potash revenue means the government will dip into the province’s rainy day fund to maintain a balanced budget.
The 2013-14 Third Quarter Financial Report released today shows General Revenue Fund (GRF) revenue is down $144.2 million from budget estimates. A transfer of $135 million from savings in the Growth and Financial Security Fund (GFSF) is needed to offset the revenue shortfall, resulting in a $7.2 million GRF surplus.
The government is still expecting a surplus in the Summary Financial Statements in excess of $400 million, based on estimates from mid-year.
“The Growth and Financial Security Fund is the province’s rainy day account, “ Finance Minster Ken Krawetz said. “It’s there to buffer the province when extreme, unforeseen events arise, such as the global events affecting the potash price or expenses related to disaster assistance. “However, we continue to project a healthy surplus on a summary basis.”
Overall, GRF expense is up $48.4 million, or 0.4 per cent compared to budget. This is largely due to higher than forecast expenditures related to disaster assistance, funding for people with disabilities, winter highway maintenance and flood damage reduction measures, as well as higher claims under the Research and Development Tax Credit.
2013 economic growth was projected to be 3.6 per cent at mid-year, up from 2.6 per cent at budget, primarily reflecting a record crop, more people working in the province, higher-than-projected personal income, and higher corporate income, which reflects more business investment.
Following the transfer to the GRF, the GFSF will continue to have a healthy balance of more than $531 million.
“It’s important to remember that government revenues are not necessarily a reflection of the strength of the economy,” Krawetz said. “Overall, our economy remains very strong. However, our projections at third quarter underscore the volatility of our resource sectors and reinforce the need for our government to continue to manage spending and meet these fiscal challenges in a prudent and responsible manner, which we have done.”