Loyola "Rain Man" Sullivan delivered his budget for Fiscal Year 2006 this afternoon, with a 10% increase in government spending and cash poured into just about every existing demand in the province.
Consider this the first of two budgets aimed at winning every seat in the province for Danny Williams in the next election. By October 2007, the entire electorate will be asking "What other choice is there?" except to vote for Danny Williams. Judy Foote, the member for Grand Bank district and former cabinet minister, may rue the day she uttered the same phrase when talking about her motion yesterday calling for an "independent" public inquiry in Fishery Products International.
Total spending is projected to be $5.6 billion. The provincial government's own-source revenues are higher than the entire provincial budgets delivered less than a decade ago.
Biggest cash increase came from oil and gas which generated almost $1.0 billion dollars last year in revenues. Government deliberately low-balled the numbers last year.
Some preliminary highlights and observations:
1. The budget for Danny's own Department of Business has more than doubled going from $1.7 million last year to $3.8 million this year.
Still no word on the main departmental initiative, namely the Young and Cool rebranding initiative.
Question: who got the rebranding contract?
2. $100,000 to design and implement a communication strategy to support the sealing industry.
Question: Who will get that contract and how will it be awarded?
3. Oil and gas royalties in 2005 were more than double last year's budget projections. Last March, Bond Papers noted the budget spin control deployed by government for last year's budget.
This year's budget shows just how much Rain Man spun his numbers last year, especially on oil and gas revenues.
4. Loyola Sullivan's revenue projections were out of whack yet again. In 2005, Loyola Sullivan projected a deficit of almost $500 million. His actual position at year-end showed a surplus of over $70 million. That's a pretty big shift. But then again, he was off in his first budget as well, by an equally horrendous amount.
If we use the past to guide our projections, expect that this budget will see revenues about $500 million higher than Loyola is allowing. Oil and gas revenues plus the full production impact of Voisey's Bay will be the drivers.
5. Look back at the March archive for the Bond Papers and you'll see Loyola was musing about huge deficits for the foreseeable future and investing the offshore cash in a way other than what he did. They dropped it all into the unfunded pension liabilities.
6. Equalization dropped this year by about $191 million even though oil revenues grew by more than that. At the same time, the combination of the Real Atlantic Accord (1985) and the January 2005 deal produced "offsets" of $329 million.
When Danny Williams claimed "We got it" what he supposedly meant was "we got the original plan" in which the offsets were supposed to equal oil revenues. By my rough calculation, the "offsets" are roughly $142, 800, 000 less than the actual royalties from 2005, much less the total revenues for that year. They 2006 offsets are about 50% of the total royalties projected for FY 2006.
7. While provincial own-source revenues are higher than total government spending a decade ago, the federal transfer portion remains about the same in dollar terms as it has been for some time. The Government of Canada will send Newfoundland and Labrador about $1.6 billion in FY 2006 to help make ends meet.
