P.E.I. boosts spending, retains surplus in 2018 budget

The P.E.I. government found itself in a position to go on something of a spending spree in the 2018-19 budget, presented Friday, and went for it.

Estimates for the coming year's budget include an additional $107 million in spending over the estimates for 2017-18, a 5.7 per cent increase, while posting a small surplus for both the previous and current fiscal years.

Health PEI is the biggest beneficiary of Finance Minister Heath MacDonald's first budget, with $32 million added to its budget, but many departments saw significant increases.

• Communities, Land and Environment: +$8.6M
• Education, Early Learning and Culture: +$18M
• Family and Human Services: +$18M
• Transportation, Infrastructure and Energy: +$11M
• Workforce and Advanced Learning: +$6.7M

That's how the numbers compare versus what was in the province's budget one year ago. Compared with what government actually spent in each of those departments over the past 12 months (which was over budget), some of the increases are pared down somewhat, with overall spending up $78.6M:

• Health PEI +$13.3M
• Communities, Land and Environment: +$7.9M
• Education, Early Learning and Culture: +$10.6M
• Family and Human Services +$11.1M

Despite all the extra spending, the government is estimating a $1.5 million surplus for 2018-19. The $600,000 surplus estimated last April for 2017-18has been updated to a $1.2 million surplus.

Time to spend

In the budget lockup with the media before presenting his budget, MacDonaldreflected on the decision to spend in this budget, rather than paying down the province's net debt, which currently stands at $2.2 billion.

MacDonaldsaid after years of fiscal restraint, the Liberal government was ready to open up the wallet.

"I strongly believe now is the time to spend some money," he said.

"There's no worries in paying down on the net debt ... if our economy sustains, which we expect it will."

According to budget documents, even though the operating budget is in surplus, with capital spending taken into account, the provincial net debt will grow by $56.5 million this year.

Despite all the new spending, MacDonaldsaid there were still difficult decisions to be made, balancing the wants and needs in different departments.

"It's no fun. You never have enough," he said.

"It's a long, tedious, trying process."

Increase in federal funding

The province can thank the federal government for much of the revenue that is allowing the increased spending.

Federal transfers are up $60 million over last year's estimates. The increased transfers are spread out over a number of areas. Some of the largest increases are:

• Equalization: +28.6M
• Canada Health Transfer: +2.8M
• Infrastructure: +7.8M
• Housing Trusts: +$6M

This budget also sees the introduction of the federal Low Carbon Economy Fund, worth $5.8 million

The P.E.I. government is also forecasting significant increases in its own revenue sources, a total of $43.3 million from income tax, property tax, sales tax, and corporate tax.

Road to the surplus

In 2012-13, the provincial government ran a $79.9 million deficit. That number gradually fell, until the first surplus in a decade was posted for this fiscal year.

• 2012-13: $79.9M
• 2013-14: $45.9M
• 2014-15: $20.3M
• 2015-16: $13.1M
• 2016-17: $1.3M
• 2017-18: $1.2M (surplus)
• 2018-19: $1.5M (surplus)

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