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Towards a deficit much higher than the forecast of $2 billion

Towards a deficit much higher than the forecast of $2 billion

The financier of Legault’s government, Finance Minister Eric Girard, has lost all the maneuvering room he granted himself in the 2023-2024 budget, presented last March.

In fact, according to the financial situation report as of 2H The quarter that the Minister has just put forward, the 1.5 billion “emergency allocation” that appeared in the March 2023 Budget has been fully used.

According to Minister Girard’s “New Budget Estimate”, the CAQ government is heading towards a deficit (before transferring money to the Generation Fund) of around $2 billion, even after the $1.5 billion “emergency allocation” is fully used.

This does not bode well…

However, the risks of seeing Legault’s government end this fiscal year with a larger deficit are high.

this is the reason. In its budget forecasts Economic modernization Last November, increases for the renewal of collective agreements were based on an overall offer of 14.8% over five years.

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 This offer was rejected and rescinded by union representatives of the state’s 600,000 employees.

To put an end to the massive conflict with public and semi-public servants, it is clear that François Legault, together with the minister in charge of negotiations Sonia Lebel and financier Eric Girard, will have to grant a higher salary increase.

We are probably talking here about several hundred million dollars for each of the next five years of the collective agreement, starting with the fiscal year that began on 1any Last April. The old collective agreement expired on March 31. Therefore, we are in the first year of the new agreement that the two parties are seriously negotiating.

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The fall of government business

When presenting the budget last March, Minister Girard expected to collect revenues of $6.8 billion from government companies, including Hydro-Québec, SAQ, Loto-Québec and Investissement Québec. Over the months, he was forced to sharply review his revenues from government companies.

He now plans to end the current budget year with $1.2 billion less than initially planned, with revenue falling from $6.8 billion to $5.6 billion. These are Hydro’s revenue projections that are literally down, even by at least 850 million.

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

Federal transfers are on the rise

Fortunately, the decline in revenue from state corporations and taxes has been largely offset by a $1.76 billion increase in revenue paid by the federal government, which this year will total $31.5 billion.

Increase in spending

Although 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 an additional spending of $2 billion. Compared to its initial expectations last March.