Well, here it finally is.
The much-delayed, much-pandemic-hampered Newfoundland and Labrador budget has arrived, with half the fiscal year already gone.
And it’s an interesting one.
First, because we’re taking on more debt. There’s a $1.84-billion deficit in the budget, as the province is forecasting declines in a number of taxes as a result of the pandemic: personal income tax revenues are expected to fall by $60 million alone, with a similar-sized decline in sales tax — the province’s tax on liquor, meanwhile, is expected to bring in an additional $20 million this year.
That $1.84-billion deficit means that, out of the province’s $7.3 billion budget, fully 25 per cent will have to be funded with borrowed money.
Spending is growing, even as revenue is shrinking.
As a province, we’ll need to go to the markets to borrow $3 billion — about $6,000 in borrowed money for every person in the province, after lenders were hesitant to even lend to our provincial government last spring.
And our net debt will reach a staggering $16.4 billion this year — in simple terms, if we took every penny the province was to receive in income tax and sales tax for the next six years and apply it to the province debt, we still couldn’t pay it off.
Debt charges — the money it costs to pay for the money we’ve borrowed — will reach $1.5 billion, meaning that, in a single year, debt servicing will have grown from one-third of the cost of health care in this province, to one-half the cost of health care in this province.
Despite the clear and obvious fiscal challenges, a lot of past projects are moving steadily forwards. And there are new ones. There are no significant cuts and few new taxes.
There is, of course, much-needed money to help with the effects of the COVID-19 pandemic — that’s clearly necessary in uncertain times.
But the province is also pushing ahead with over $600 million in infrastructure funding. The finance minister has promised to deliver on the premier’s commitment for $25-per-day child care. The government is expanding the insulin pump program and bringing in a province-wide emergency communications system for first responders. There’s $22 million in new money for the province’s education system.
Spending is growing, even as revenue is shrinking.
Growth in programs may be popular — and, in many cases, necessary — but, right now, it might not be sustainable, especially if there have to be cutbacks later.
After all, the fundamental changes that will be required for the province’s fiscal survival have been handed off to an economic committee that won’t report until next spring.
The finance minister calls it a “hold-the-line in pandemic times” budget. It also looks, perhaps to a jaded eye, like a perfectly functional “campaigning in pandemic times” budget.
It makes you wonder if an election call is coming more quickly than anyone might expect.
