P.E.I. Auditor General Concerned as Deficit Nearly Doubles

P.E.I.’s auditor general says he’s concerned and disappointed that the projected deficit has doubled what government initially estimated it would be – and he’s urging the province to balance its budget.

In its second-quarter fiscal update, released Thursday, the progressive Conservative government said the deficit is now projected to hit $367.4 million – nearly double the $183.9 million estimated back in the spring.

Auditor General Darren Noonan isn’t surprised: he’s been raising concerns about the province’s rising debt for years.

“In terms of the deficit itself, very disappointed to see that level of overspending.”

The fiscal update shows the bulk of that overspending came from a few key areas:

* Health spending is up $70.9 million: Out-of-province health services, food and supplies, and staffing costs have all gone up.
* P.E.I. agricultural insurance is expecting an increase of $20 million: Low yields on crops like soybeans and potatoes have caused a spike in insurance claims.
* Social progress spending is up $13.8 million becuase of an increase in requests for social assistance.
* General government costs are over budget by $13.5 million, in part to cover the cost of pay raises for government employees.

P.E.I.Faces Mounting Debt and Tough Choices

Prince Edward island’s finances are facing significant challenges as the province’s debt continues to climb, leading to increased interest payments and possibly tough decisions regarding programs, services, and taxes.

According to a report by DBRS Morningstar,P.E.I. currently holds the lowest bond rating in the country.

Financial analyst Peter Noonan estimates the province will pay $171 million in interest costs, a considerable increase from the $125 million paid in 2020. This represents a $46 million increase in just five years.

“How do you fix that? That’s a huge discrepancy from a balanced budget, so there’s going to be a big challenge for this government and future governments to get us back to balanced budgets,” Noonan said.

He explained that the only viable paths to debt reduction involve either reducing programs and services or increasing taxes.

“We’re in a position now where government is going to need to make some very tough decisions,” he said. “It seems to be that we’re at the point where government needs to start saying no…. Government can only do so much, and I think they’ve kind of reached that point.”

P.E.I.Liberal Leader Robert Mitchell