Saskatchewan is still at the top of the economic class, but there are signs its grades may slip. Two bond rating agencies recently issued report cards for Saskatchewan’s finances and they weren’t anything to write home about.

Bond rating agencies provide credit ratings for governments that are similar to credit scores for individuals. When individuals rack up too much debt, their credit score takes a hit and lenders will increase interest rates on new loans. It’s the same for governments – those that borrow too much see their credit ratings downgraded and their interest rates go up.

Saskatchewan got a AAA rating from bond rating agency Standard and Poor’s (tied for tops with Alberta and B.C.), but the agency said that may change for the worse in its release on Oct. 8.

“We are revising the outlook on the Province of Saskatchewan to negative from stable, reflecting our expectations that Saskatchewan’s budgetary performance could weaken in the next two years as a result of the deterioration in oil prices,” said Standard and Poor’s in its release. “The affirmation [of the AAA rating] reflects our view of the province’s strong exceptional liquidity, very low tax-supported debt burden, and very strong economy.”

Standard and Poor’s also recalculated Saskatchewan’s balance sheet to include all of its income and expenses.

“[Saskatchewan’s] after-capital deficit widened to about 4.5 per cent of adjusted operating revenues in fiscal 2015,” said Standard and Poor’s. It went on to project a rating downgrade if oil prices continue to slump or that 4.5 per cent rises to 5 per cent.

Saskatchewan maintained its AA rating (just below Alberta’s AAA rating and B.C.’s AA-high rating), according to bond rating agency DBRS’s analysis released on Oct. 5.

“[Saskatchewan’s] sound fiscal management, low debt burden and resilient economy support the strong credit profile,” said DBRS.

DBRS also noted that the Saskatchewan government announced a budget surplus of $107 million, but after DBRS included all costs, including pension liabilities and capital costs, it found something different.

“On a DBRS-adjusted basis this translates to a deficit of $1.6 billion,” said DBRS. It went on to project that Saskatchewan’s debt will rise from 14.9 per cent of GDP to 19 per cent by 2018-19.

The Saskatchewan government acknowledged the need for spending cuts when it announced an operating deficit of $292 million. However, the government is still going ahead with more than $700 million in borrowing to fund infrastructure projects this year. Saskatchewan is spending more per capita than Manitoba and the Saskatchewan Party government is spending more than the previous NDP government even after accounting for inflation and population growth.

Even more concerning, the Saskatchewan budget makes it clear the government plans to continue borrowing for the foreseeable future. Next year the province is projecting a surplus of $121 million after putting $100 million into the contingency fund. But that changes when the capital spending is included. Even if the surplus and savings are used, the province plans to spend $764 million more than it has in projected revenues.

The last Sask. Party election platform included a commitment to: “reduce debt and balance the budget.” It seems that commitment won’t be part of the next platform.

The report cards are clear. Yes, we’re doing better than other provinces, but that’s partly because they’re running massive deficits compared to our more modest borrowing. And yes, our economy is strong, but it took hard work to build this strength and increasing debt will take us backward. It’s time to take a hard look at the books and cut spending.