This column was originally published in the Regina Leader-Post and Saskatoon StarPhoenix, and is now free to reprint.

Saskatchewan’s operational deficit is now more than a billion dollars, according to the province’s mid-year fiscal update. Diving that deeply into debt is a serious threat to the province’s financial health. It’s time to make tough decisions.

Saskatchewanians are paying less tax than the government expected. It’s not because of tax cuts – that hasn’t happened for a few years. It’s because Saskatchewanians have less money. Struggles in the resource sectors are rippling throughout the economy. When families and businesses have less money, they pay less tax.

In fact, the government now projects income tax revenues will be $172 million less than budgeted. Sales tax projections are down $128 million and business taxes are down $81 million. Add up all of the tax revenue declines and they total $400 million. That’s on top of the $180 million in lower-than-budgeted non-renewable resource revenues.

This leads to a common-sense conclusion: Saskatchewanians can’t afford higher taxes. Governments are always tempted to hike taxes to fix deficits. But higher taxes would make it harder for businesses to create jobs; that would make it harder for people to find work; and, that would paradoxically increase the risk of further revenue declines for government. It’s a downward spiral Saskatchewan can’t afford.

Falling revenues are only part of the story: government spending is going up. The province is projecting expenses to come in at $285 million over budget. The province is overbudget in six of eleven major expense categories.

In response, the Saskatchewan government is restating its commitment to “transformational change.” To that end, the government has found $217 million in savings. Most of the budget trimming to this point has been focused on “workforce management” and “administrative savings.” The government deserves credit for finding these savings, but they don’t add up to enough to cover its own increase in spending, or the $292 million for this year’s interest payments on the province’s existing debt.

The government is now talking about applying transformative change to a much bigger expense: salaries. The province pays bureaucrats $6.3 billion per year. It’s implementing a hiring freeze. Now the government is hinting at a government-wide wage freeze.

It’s good the government is moving beyond “administrative savings” to tackle salaries. If the government had stuck to its budget this year and kept spending flat next year, a freeze on hiring and wages might have been enough. But that’s not what’s happening. In the spring budget, projections showed spending wouldn’t hit $14.7 billion until the 2018-19 fiscal year – now the government is on track to spend more than that this year. The government has to go beyond a wage freeze, it has to roll back wages.

It’s an unpleasant reality, but it’s not unfamiliar. Oil rig workers are at home waiting for the phone to ring. Pink slips have appeared at mines sites. Local newspapers are struggling. Virtually everyone in the province has experienced the downturn in some form. Government employees cannot continue to get scheduled raises as usual while taxpayers who foot the bill make do with less.

And while this reality is unpleasant, it’s important to consider the consequences of inaction. When the bond rating agency S&P Global downgraded Saskatchewan’s credit rating this summer, it included a negative outlook because “there is a one-in-three chance that the province will not be able to meet its budget targets of low or no growth in operating expenditures.” That one-in-three chance now seems to be a certainty and the risk of another downgrade is rising accordingly.

There are worse things than wage rollbacks. The last time this province faced massive layoffs of government employees, it came after years of failing to heed warnings about mounting government debt and credit rating downgrades. We can’t make that mistake again. We have to do the difficult things now to prevent the disastrous things later.