P.E.I.'s latest budget unveiled, with still no end in sight for deficits

The P.E.I. government has managed to knock its projected deficit for 2023-24 down a little, but its projections for the coming two years show much higher losses are looming.

Finance Minister Jill Burridge tabled the provincial operating budget in the P.E.I. Legislature Thursday. Her second budget as minister projects revenues of $3.15 billion and planned spending of $3.23 billion.

The budget forecasts an $85.5-million deficit for the current budget year, down from the $97.6 million estimated last spring.

The deficits for the coming two years, however, are expected to be almost $60 million higher than government had projected a year ago.

"We're working back to balance," Burridge told media before she tabled the budget. "The need for investing in key areas means we will return to balance at a slower pace."

Some of that "investing" comes in the form of:

• $10 million to work with non-profit groups and housing co-ops to build new affordable housing units and keep existing ones on the market.

• $10.5 million in additional spending to develop medical homes, although the target date to have 30 of them in place has been pushed back from the end of this year until next spring.

• An extra $6.2 million for health-care recruitment.

• $36.2 million to continue developing the new medical school at UPEI over the next year, which includes $9.9 million in new funding.

• $4.5 million to boost wages for workers at private long-term care and community care homes.

• $1.1 million to introduce a P.E.I. children's benefit for families, similar to the federal child benefit, starting in January 2025. This will be an income-tested program for families with a net income under $80,000, who'll receive up to $30 per month per child.

In all, the estimate of the combined deficits for the three fiscal years from 2023 to 2026 have grown from $187.1 million last year to $230 million.

The growth in net debt to GDP remains manageable, said Burridge. It will grow from 27.4 per cent in 2023-24 to 29.5 per cent in 2025-26.

Income taxes lower than expected

Without a recalculation of sales tax owed to the province through the HST, the deficit in 2023-24 would have been far higher.

Another view of Jill Burridge delivering her budget speech in the P.E.I. legislature. (Kerry Campbell/CBC)

Estimates of personal and corporate income taxes were revised downwards from last May by more than $30 million. The recalculation of sales tax owed to the province, however, added more than $60 million to revenues.

With the province's population growing at a record pace, personal and corporate income taxes are expected to return to a sharper growth curve in 2024-25.

Growth in personal income taxes will come despite changes the government says will lower taxes for individual Islanders.

The basic personal exemption will increase from $13,500 to $14,250. Tax rates for the first four tax brackets will also be lowered.

The government estimates these changes will mean $14.6 million less income revenue for the province.

Another $90M for health care

As has been common in recent years, the biggest increase in P.E.I. government spending will be in health care.

Health care spending edged up over a billion dollars in 2023-24, and spending in the coming year will add about $90 million to that.

The province has added a further $65.9 million to Health P.E.I.'s budget, a 7.3 per cent increase that will bring its total for 2024-25 to $963.8 million.

The Department of Health and Wellness, in percentage terms, is seeing an even bigger increase. A further $24.2 million in spending will bring that budget to $162.1 million, a 17.5 per cent increase.

The province lists a number of programs that are part of that increased spending.

• $10.5 million more for patient medical homes.

• $9.9 million more for UPEI's medical school.

• $7.1 million for more doctors and residency seats.

• $6.2 million to improve recruitment of health-care professionals.

• $4.9 million for new supports for seniors.

• $4.5 million to move toward wage parity for long-term care workers in the private and public sectors.

More teachers, school bus drivers

Education, the province's second largest department, will see another $28.5 million in spending, a 7.0 per cent increase.

In new spending, the biggest chunk goes to more front-line workers, such as teachers and school bus drivers, with another $7 million allocated.

Continuing the implementation of $10/day childcare, along with support for operators to create new spaces, adds another $4.3 million.

The George Coles bursary, for Island students attending post-secondary programs, will increase from $3,000 to $3,200.

The province will also create a vision care program for elementary school-aged children and add $1 million to the school lunch program.