Rural Saskatchewan is taking its share of the hit in the provincial budget announced March 22.
The budget was expected to be tough, considering a continual decline in resource revenue since 2014 that has led to a deficit of at least $1.3 billion.
Premier Brad Wall took to social media earlier in the week to signal a shift from resource to consumption tax revenue and the 2017-18 budget delivered by finance minister Kevin Doherty did just that.
Effective midnight, the provincial sales tax will rise by one point, from five to six percent, and be applied to more items to bring in an extra $900 million.
This will be partly offset by personal income tax changes and enhancements in tax credits for low-income residents, the government says.
But it’s the expansion of the PST base that most people will notice.
Children’s clothing, restaurant meals, snack food and other items are no longer exempt.
Farm bulk purchases of gasoline are no longer exempt from the 15-cent-per-litre fuel tax, and the exemption for diesel is reduced to 80 percent.
Both of the farm fuel tax measures take effect April 1.
Organizations such as the Agricultural Producers Association of Saskatchewan were staunchly opposed to any changes to the tax program, saying it would cost $380 million if all farm tax measures were removed.
The government says the changes it did make will increase its fuel tax revenue by $40.2 million.
Doherty said the policy had served its purpose and it was time to remove it.
Other exemptions to inputs like seed, pesticides and new equipment were not eliminated because no other provinces tax those items, Doherty said, even though it would mean a substantial amount of money.
“We looked at it and we looked at it,” he said. “I can’t imagine what would happen to our economy in rural Saskatchewan… if we were the first government in Canada to tax those inputs.”
Farmers will also be affected by changes to education property tax to bring the system back to a 60-percent government, 40-percent property tax split. Property tax has been paying about 35 percent of the education bill the last few years.
The provincial mill rates were adjusted downward for all property classes but because of reassessment and increased property values the government will actually take in more money.
The agricultural mill rate is dropping from 2.67 last year to 1.43, but payments will rise from $39 million to $46.1 million.
Overall the education tax increase will total $67 million.
The Saskatchewan Transportation Company will be wound down by the end of May. Freight will be accepted for delivery until May 19 and passenger service will end May 31.
The government says the bus company’s subsidy has grown to unsustainable levels, from $25 per passenger 10 years ago to $94 per passenger today.
Doherty said only the Regina-Saskatoon route is profitable and even though previous decisions to discontinue routes and adjust schedules were made the company continued to need larger subsidies. Ending the company will save $85 million over the next five years.
About 224 STC staff are among 534 people losing jobs as a result of the budget. Another 230 were already identified when the government said it was moving to private cleaning staff in its buildings, and the health system will see about 80 as it moves to a provincial health authority.
The budget also announced the sale of the province’s 900 grain cars as the government winds down the Saskatchewan Grain Car Corp.
The province’s 13 shortline railways, which are losing their maintenance grant program in this budget, will get the first opportunity to buy the cars. A competitive request for offer process is open until May 12, with the sale to be concluded this summer.
The cost of replacing the original fleet of 1,000 cars is estimated at $100 million and Doherty couldn’t say what their sale might bring in.
Meanwhile, the government’s efforts at transformational change have extended to agriculture.
The Saskatchewan Pasture Program will be wound down after this grazing season. There are no savings identified in the 2017-18 budget, and the ministry notes that the grazing program operates on a breakeven basis through the Pastures Revolving Fund.
The 780,000 acres of land in 51 pastures will continue to be available for grazing, but under a different management model.
Agriculture minister Lyle Stewart said the industry has evolved.
“Managing private cattle is no longer a core business function of the government,” he said.
Public consultation on future management, with stakeholders including First Nations and Metis, will be held for the next six weeks. An online survey will be at www.saskatchewan.ca/pastures from March 27 to May 8. (NOTE: at the time this story was posted this link was not yet live)
Doherty also announced that transformational change in education will not include any amalgamation of school divisions.
The government accepted a report that school boards should continue to be elected and division boundaries shouldn’t change. However, he said divisions will have to work together more on efficiencies in areas such as bussing and procurement.
Finally, rural municipalities will get less from the government this year as the budget cut the Municipal Roads for the Economy program from $16 million to $14 million and overall revenue sharing is down because it is based on PST revenues from two years ago.