Toward a deficit higher than expected by $2 billion

The Legault government’s financier, Finance Minister Eric Girard, lost all the room for maneuver he gave himself in the 2023-2024 budget presented last March.

In fact, according to the report on the financial situation as of 2^e In the quarter just presented by the Minister, the `1.5 billion “Provision for Contingency Needs” that appeared in the March 2023 budget was fully utilised.

According to Minister Girard’s “new budget estimate”, the CAQ government is heading for a deficit of almost $2 billion (before the transfer of money to the Generations Fund) even after fully using the $1.5 billion in “contingency provisions”.

This is not good…

That being said, the risks are high that the Legault government will end up with an even bigger deficit this fiscal year.

Here’s why. in its budget estimates Financial update Last November, increases related to the renewal of collective agreements were based on a total offer of 14.8% over five years.

However, the government’s offer currently on the table has already been revised to 16.7% or 1.9 percentage points. The offer was rejected by union representatives of the state’s 600,000 employees and fired.

Francois Legault, the minister in charge of negotiations, Sonia Lebel, and financier Eric Girard will have to grant a huge salary increase to end the massive conflict with public and parapublic service employees.

We’re talking here about several hundred million dollars for each of the next five years of the collective agreement, starting with the fiscal year that started on 1.^er Last April. The old collective agreement expired on March 31. So we are in year 1 of a new convention that both parties are actively negotiating.

Fallen government enterprises

When the budget was tabled last March, Minister Girard predicted $6.8 billion in revenue would be collected from government agencies including Hydro-Québec, the SAQ, Lotto-Québec and Investment Québec. For months, he had to drastically revise “his” earnings from state institutions.

He now plans to end the current budget year with $1.2 billion less than initially planned, with revenues falling to $5.6 billion from $6.8 billion. These are Hydro’s revenue estimates, which have been reduced by at least 850 million.

Another hard hit on the revenue side: Revenues from personal income taxes will fall by $449 million compared to initial estimates, and by $929 million from corporate taxes.

Federal transfers are increasing

Fortunately, the decline in revenues from state corporations and taxes was offset by a $1.76 billion increase in revenues paid by the federal government, bringing the total to $31.5 billion this year.

Increase in cost

While the CAQ government plans to spend $567 million less in the Education (-$273 million), Higher Education (-$146 million) and Transportation (-$146 million) portfolios, it plans to end the current fiscal year with $2 billion in additional spending. to its initial estimates last March.