Saskatchewan presented the province’s 10th-consecutive balanced budget today, with the good news that it managed to briefly join Alberta and Ontario as a ‘have’ province.

Finance Minister Jim Melenchuk said Saskatchewan received no funds from the federal equalization program, although it will receive funds next year.

The news was further evidence of the province’s strong financial performance last year, said BMO Nesbitt Burns analyst Ryan McGraw.

Meanwhile, the province posted a surplus of $2.1 million in fiscal 2003, without the need of its Fiscal Stabilization Fund, contrary to budget plans a year ago. However, the fund will have to be tapped for $393 million to balance the books in fiscal 2004.

The budget will provide significant new funds for health and education, and has continued to trim personal and corporate tax rates.

Nevertheless, as in most provinces, finances are under pressure from the rising costs of health care. Saskatchewan’s health care system is getting an additional $175 million in 2004 – a 7.5% increase. Education spending will also get a boost of just over $82 million, or 8.5%. Overall operating spending will actually decline by 2.9% excluding health and education. Total operating expenditures are planned to rise by $186 million (or 3.2%).

Saskatchewan will also proceed with previously announced tax cuts. This year, the two lower personal tax brackets dropped by 0.25 percentage points, while the top tax bracket fell by 0.5 percentage points to 15%. On the business tax side, the capital tax exemption will be increased. As well, the small business rate will be reduced from 6.0% currently to 5.5% in 2004, and 5.0% in 2005. Revenues will fall by 2.8%, led by a $308 million decline in oil revenues.

The province’s borrowing requirements are expected to rise by $251 million to just over $872 million. “This will hold the debt/GDP ratio flat at 23.5% in 2003, with a modest decline to 23.2% the following year,” McGraw said in a report. “The budget was based on a forecast of 6.8% real GDP growth in 2003, led by a return to normal crop levels after two years of severe drought.”