Mandryk: Added mid-year crop insurance costs won’t change

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The culprit behind another dramatic mid-year increase in Saskatchewan’s budget deficit may not be the culprit some city residents increasingly want to blame.

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In fairness, it’s hard to get a handle on whether Saskatchewan Crop Insurance payouts are completely fair to all provincial taxpayers.

More evident, however, is that crop insurance will become increasingly more costly — the result of more valuable crops and likely more frequent payouts due to climate change.

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Just don’t expect any Saskatchewan politician to change anything about it — whether it’s a significant factor increasing provincial deficits or not.

The Sask. Party government announced its 2024-25 mid-year budget projection update late Thursday afternoon, revealing that the $273.2-million deficit predicted in March has vaulted to $743.5 million.

While overall provincial revenues have slightly increased to $20.137 billion in 2024-25 compared with the $19.862 billion predicted at budget time, the government is collecting $321 million less in corporate income tax and $125 million less in provincial sales tax. The latter, finance officials explained, is due to an economy slowed by inflation.

The problem is that spending has increased by $745 million since March … although not necessarily because of costly Sask.Party election promises that don’t generally kick in until next year.

Nor did the added budget costs have much to do with the pre-election budget theme of “Classrooms, Care and Communities.” Education and social services spending are exactly as budgeted. Health care is up by $100 million, but that’s paltry in the context of its $7.7-billion budget. And community development spending is actually down about $8 million.

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Interestingly, “general” government spending, which would include Premier Scott Moe’s executive council office, is also up by $100 million. That should nicely cover the $818-a-night hotel bills Moe and his staff ran up in June, which we’re just discovering about a month after the provincial election.

There is a big $128-million chunk for the “protection of persons and property” line item — additional costs for things like policing, corrections and especially forest firefighting.

But the lion’s share of the increased cost is the added $385 million for agriculture to help cover bigger Saskatchewan Crop Insurance payouts that resulted from a hot July decreasing yields.

It’s massive, but a couple things about rising crop insurance costs need to be put into perspective.

As described by new Finance Minister Jim Reiter, crop insurance is a flow-through cost in summary finance budgeting (budgeting that includes the Crown corporations) we’ve used for more than a decade.

It remains a largely self-sustaining insurance program in which farmers contribute 40 per cent to the fund and the provincial and federal governments contribute the remainder. Reiter noted $300 million remains in the fund. Moreover, officials note that in six of the last 10 years, there’s been no need for such mid-year adjustments.

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Nevertheless, governments’ contributions to crop insurance costs are increasing, and will continue to do so because of climate changes and increasing crop values.

That raises the question of whether farmers paying 40 per cent is fair. It’s a good question, but don’t expect politicians to ask it.

What the October election mostly demonstrated is that the Sask. Party won’t do anything to risk its 29 rural seats. That means it will have no interest in to collecting any provincial sales tax on farm inputs like seed, fertilizer, chemicals, machinery (an annual $638-million tax exemption) or taxes on gas and diesel (another $98-million tax exemption).

On Thursday, Reiter downplayed the idea of taking a serious look at the current crop insurance formula.

But given the way NDP finance critic Trent Wotherspoon twisted himself into a pretzel to avoid saying anything negative about the single-biggest added expense, don’t expect the NDP to press for changes to crop insurance, either.

The NDP gets that such advocacy would blow any faint hopes it might entertain for a rural seat.

Instead, keep expecting crop insurance to add to Saskatchewan’s budget costs.

Mandryk is the political columnist for the Regina Leader-Post and the Saskatoon StarPhoenix.

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