REGINA - The federal government is "sacrificing'' Western Canada's resources to gain favour in Quebec, Saskatchewan's government charged Tuesday after word leaked about a solution to the so-called fiscal imbalance.

Saskatchewan Finance Minister Andrew Thomson called the proposal "a betrayal.''

"It's clear that what they're trying to do is to buy Quebec votes with western oil,'' said Thomson. "It is not a good way to build national unity.''

The French-language network of the CBC reported Monday that a proposal in the upcoming federal budget would exempt half a province's revenues from non-renewable natural resources, such as oil and gas, from the formula used to calculate federal equalization payments to the provinces.

That position is supported by Quebec, but is a far cry from the 100 per cent promised to Saskatchewan.

"The Conservatives campaigned hard on saying they would remove natural resources from the equation,'' said Thomson.

"If this is the fact, that they are going to move forward with this, this is an absolute betrayal of what their election promise was.''

In the lead-up to the last federal election, the Conservatives led by Stephen Harper promised to reform the $12-billion equalization program, which is designed to help poorer provinces provide government services at a national standard.

In a letter dated Jan. 16, 2006, the soon-to-be prime minister wrote that "a new equalization formula should exclude non-renewable resource revenues for all provinces.''

A spokesman in the Prime Minister's Office, speaking on condition of anonymity, said Tuesday that reports on the budget are speculative and that "fear-mongering before the facts is not productive.''

By many estimates, removing non-renewable natural resources from the formula would mean an extra $800 million a year for Saskatchewan.

"This is money that Saskatchewan's economy is generating,'' Thomson said at the provincial legislature. "It should be used here in Saskatchewan to help move the western economy forward.

"We'll end up with, under this formula, we estimate somewhere between zero and $50 million. So it's really not a very good deal.''

Saskatchewan wasn't the only province balking at the proposal.

Newfoundland and Labrador Premier Danny Williams has also long argued to remove non-renewable natural resources from the equalization formula.

He called the proposal "a serious blow'' to his province.

"I don't see why (Prime Minister Harper) should impose a formula that ... at the end of the day is going to penalize Saskatchewan and penalize Newfoundland and Labrador, and ultimately have benefits for the rest of the provinces across the country,'' said Williams.

"I can't understand, for the life of me, why he would do that, and I fully don't expect him to do that.''

In Alberta, another province that has locked horns with Ottawa over equalization, Premier Ed Stelmach was cautious.

"I want to hear directly from the prime minister or from the finance minister what the intent is,'' he said. "Nobody has approached us.''

But Stelmach did say he believes that "Albertans are paying their fair share and that Albertans have always been in the past.''

Williams suggested there's a way of being fair to Quebec that wouldn't hurt other provinces.

Williams and Saskatchewan Premier Lorne Calvert plan to campaign in each other's provinces in an attempt to build support for their equalization fight with Ottawa.< 

In Quebec City, the province's intergovernmental affairs minister reacted cautiously to the report.

"This is just speculation,'' said Benoit Pelletier. "There has been no formal offer from Ottawa. Discussions are ongoing.'' 

Pelletier said Quebec wants a long-term settlement.

Thomson said he has made an urgent call to his federal counterpart, Finance Minister Jim Flaherty, for clarification on the proposal. Flaherty was unavailable for comment.

"I can't imagine that the Conservatives would be so manipulative to try and run both courses in a way that tries to appease Quebec and the same time tries to save their hide here in Saskatchewan,'' said Thomson.