(Quebec) “Largely in deficit”, the next budget of the Legault government will be tabled on March 12, announced the Minister of Finance, Eric Girard on Thursday.
The stagnation of the economy causes state revenues to fall. Hydro-Québec dividends and federal transfers are less important than expected. The larger-than-expected salary increases granted to state employees are driving up spending.
“We have exceptional circumstances which are difficult. It will be a budget in difficult conditions,” but “it’s manageable,” said the government’s big financier during a press scrum. There will be “efforts to be made,” he warned, while responding that he does not regret having lowered taxes last year.
In January, Eric Girard said that “it’s mathematical: at this stage, the deficits are going to be greater.”
Prime Minister François Legault did it again on Sunday. “We find ourselves with a budget that is largely in deficit, much more in deficit than it was before these negotiations,” he said.
Quebec telegraphs a postponement of the return to budget balance planned until now in 2027-2028.
The government has agreed to pay salary increases of 17.4% over five years to state employees. Salaries will jump by 8.8% this year – taking into account the 6% increase granted for 2023 and the 2.8% increase applicable to 1er april. “It is certain that the amounts that have been granted are greater than what was provisioned in the budget update” in November, Mr. Girard admitted in January. In his update, he expected salary increases of 10.3% in five years. Each percentage point increase costs $600 million per year.
In mid-December, Eric Girard revised his forecasts downward: the government’s financial framework for the current year has in fact deteriorated by $635 million due to a significant drop in anticipated revenues. The minister filled a large part of this hole by using his entire $500 million contingency reserve – the contingency cushion. The expected deficit for the current year then stood at 4.1 billion.
For 2024-2025, it is certain that the planned deficit of 3 billion will be greater. The government planned to limit departmental spending to 1.6% for the next year, a target that will be difficult to achieve in the circumstances. The time will be for “budgetary rigor”, the government is told, which refuses to speak of “austerity”.