Strong economy helps minimize projected deficit increase
The Prince Edward Island government is forecasting a $17.9 million deficit for the 2016-17 fiscal year, an $8.3 million increase over the budgeted deficit of $9.6 million.
The increase in the deficit is a result of a $30 million reduction in HST payments from the federal government and increased expenditures in several departments. These were partially offset by higher revenues resulting from a stronger Island economy.
“While our third-quarter forecasts show a higher-than-projected deficit, we are confident the sound financial management practices we have place will enable us to stay on track for a balanced budget in the coming year,” Finance Minister Allen Roach said. “We have also been able to accommodate increased expenditures in Health PEI and Family and Human Services.”
The increased expenditures are mainly due to the following:
• increases in tax rebates of $3.9 million, reflecting higher taxes paid by businesses in the aerospace and manufacturing sectors;
• over-expenditures of $6.2 million due to higher payments for disability support and social assistance;
• an increase in health costs of $16.2 million for in-province and out-of-province medical services and high-cost drugs;
• a $6.9 million increase in infrastructure projects, contract costs and purchases of land and buildings; and
• a $6.9 million over-expenditure in Labour Market Agreement Funds, offset by a revenue increase of $5.9 million.
“Our public servants are to be commended for their continued efforts to ensure we meet our budgetary objectives,” Minister Roach said.
Department of Finance