Saskatchewan surplus shrinks as health costs rise

Fri Mar 4, 2011 12:56pm EST
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WINNIPEG, Manitoba (Reuters) - Saskatchewan said on Friday it expects to post a smaller budget surplus for the current fiscal year than it had forecast due to rising costs for health care and other services.

Saskatchewan's slight surplus contrasts sharply with hefty budget deficits in most provinces following the recession. The province's oil-rich neighbor Alberta said last week that its current fiscal-year deficit would be C$4.8 billion ($4.9 billion).

Saskatchewan is the world's top producer of potash, a key fertilizer ingredient, and is highly dependent on royalties paid to it for mining the nutrient.

Last year, the provincial government successfully lobbied Ottawa to block the sale of Saskatchewan-based Potash Corp, the world's biggest fertilizer producer, to Australian mining giant BHP Billiton due to fears the takeover would cost it billions of dollars in lost revenue.

Saskatchewan is also abundant in oil and uranium, and produces more wheat and canola than any other province.

The government said in a third-quarter update that it now expects to post a slim surplus of C$40 million ($41.2 million) on its C$10.9-billion budget for 2010-11.

After shifting half of that amount to a savings account, the surplus would be C$20 million.

At mid-year, Saskatchewan forecast a C$137 million surplus before putting half of it in a reserve.

The government said its expenses were up by C$408.4 million from its mid-year forecast due to rising costs for health care and other services.   Continued...