CALGARY, Alberta (Reuters) - Saskatchewan’s new government on Wednesday projected a C$250 million ($248 million) budget surplus for 2008-09 despite higher spending as the Canadian Prairie province reaps rewards from its booming energy and agriculture industries.
Premier Brad Wall’s Saskatchewan Party also detailed plans for C$1 billion of capital investments to bolster strained infrastructure such as hospitals, schools and highways in the province of about one million people.
“In other places, we have seen the problems and the pressures that can arise when an aging infrastructure falls behind the pace of growth,” Finance Minister Rod Gantefoer said in his budget address. “Those same pressures are now emerging in Saskatchewan.”
This was the first budget for Wall’s Saskatchewan Party government, which was elected in November, ending 16 years of New Democratic Party rule.
The province is major producer of grain, potash and is Canada’s second-largest oil producer. This was its 15th straight balanced budget.
The financial plan assumes annual revenue of C$9.4 billion, up 19 percent from last year’s budget document, but 0.3 percent under the most recent forecast for the 2007-08 budget year.
Eight-five percent of the government take is made up of taxes, nonrenewable resources and other revenues. Transfers from the federal government and other cost-sharing agreements with Ottawa account for the remainder.
The budget assumes a benchmark U.S. oil price of $82.36 a barrel, compared with current levels above $100.
Despite strong oil prices and active drilling, oil revenue is pegged at C$1.05 billion, down C$98 million from the most recent 2007-08 forecast. The government blamed the decline on an increase in the amount of production receiving a lower-tier royalty rate.
Potash revenues are expected to hit nearly C$353 million, up C$91 million.
Total expenses for the upcoming fiscal year are pegged at C$9.1 billion, up 4.6 percent from forecast 2007-08 spending.
The government said it will use its surplus for debt reduction.
Reporting by Jeffrey Jones; Editing by Peter Galloway