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Prince Edward Island’s government is forecasting a deficit of $440.4 million in its first-quarter fiscal and economic update for 2026-27.
That’s up by $30.5 million from the operating budget tabled in April. The province said it reflects increased spending of $53.4 million in areas such as health care and social program funding, and higher costs for diesel and heating fuel.
“The world is very uncertain these days. I think everyone can resonate with that,” said Finance and Affordability Minister Jill Burridge.
“When we deliver a budget in the spring, it’s based on the information we know at that time and we try to estimate the best we can … but really, it’s all in just key critical operations that we need to deploy.”
She added the extra spending goes toward the “nuts and bolts of government service delivery.”
WATCH | P.E.I. government eliminating electricity rebate program, amid other budget cuts:
P.E.I. government eliminating electricity rebate program, amid other budget cuts
The Progressive Conservative government unveiled a 2026-27 operational budget that contained what it called “difficult decisions.” One of its cost-saving measures is scrapping the P.E.I. Energy Rebate Program, meaning many Islanders can soon expect higher electricity bills. CBC’s Wayne Thibodeau explains.
P.E.I.’s net debt is projected to decrease by $2.7 million by the end of the 2026-27 fiscal year compared to estimates from the spring budget.
Total revenues are expected to increase by $22.9 million, which Burridge attributed to transfers from Ottawa for housing and HST recovery.
The province said in a news release that while spending has increased, P.E.I.’s economy is also seeing improving revenues, including:
Average monthly employment up three per cent in the first eight months compared to the same period in 2025.Labour income growth of 7.1 per cent year-to-date through June, above the forecast of four per cent, with average weekly earnings of $1,177, up 5.3 per cent.Growth in retail sales of 7.1 per cent — $132 million — year-to-date through June, expected to exceed three per cent forecasted in the budget.International goods exports increased by 6.7 per cent.Housing starts increased 24.6 per cent with multi-unit starts accounting for that increase. Industrial construction is up 74.4 per cent.Early statistics from tourism show an increase in all categories of traffic as well as in overnight stays.
Those improving revenues, Burridge said, are “certainly a help moving forward.”
“We have targets — public targets — that we’re looking to meet in the upcoming budget, so lots of work has been done there,” she said.
“Government is … looking to see where we can reduce our spending, absolutely. But a lot of these pressures are critical services that need to happen.”
Burridge said health care is “a significant pressure” across the country, and provinces are “making adjustments where needed.”
She said population growth as well as aging population and infrastructure “are pressures on all governments across Canada right now.”
“All we can do right now is put our heads down, find ways to find efficiencies, reduce our spending where we’re not impacting critical services and … keep that economy going,” Burridge said, adding the province is attempting to ease strain on Islanders through initiatives like the Island Essentials Benefit.
“I think if you talk to Islanders out there today, they would say we cannot take anymore pressure right now.”