P.E.I. tables budget with record $184-million deficit in face of economic uncertainty

P.E.I. has tabled a $3.5 billion budget with a record $184 million deficit.

CHARLOTTETOWN — In the face of economic headwinds caused by American tariffs, the government of Prince Edward Island tabled a $3.5-billion budget Thursday, with a record projected deficit of nearly $184 million for the 2025-26 fiscal year.

Finance Minister Jill Burridge said the $183.9 million deficit figure includes a $32-million tariff and trade contingency fund to guard against an economic downturn resulting from tariffs imposed by U.S. President Donald Trump.

“We recognize that our economy faces challenges far beyond our borders, especially the unpredictable and damaging tariffs that threaten Island exports,” Burridge said in her budget address to the legislature.

“This contingency fund will play a pivotal role in our ability to respond quickly when further disruptions occur to our economy over the next fiscal year.”

The budget includes $294.6 million in new spending, an increase of 9.1 per cent over last year.

The minister said the government is also introducing tax reforms that will save Island businesses $9.3 million. They include raising the small business tax threshold by $100,000 to $600,000 and lowering the corporate income tax rate from 16 per cent to 15 per cent. Burridge said the measures would help over 2,800 small to medium-sized businesses.

The basic personal exemption for personal income taxes is being increased to $14,650 for 2025, and a further increase will bring it to $15,000 in 2026.

“These are not just numbers on a page, they are real meaningful changes that will have a direct impact on Island households,” Burridge said.

The Progressive Conservative government will also raise the minimum wage to $17 dollars an hour, although Burridge provided no other details.

Health care remains a top spending priority with the government allocating nearly $1.1 billion for Health PEI. There will be $4.8 million to expand access to virtual care and $4 million to expand programs that allow seniors to stay in their homes.

The budget also includes $117.3 million in spending for education, including $10.5 million to create 190 early learning spaces and $2.5 million to expand the school lunch program.

“Securing our future means making thoughtful choices, standing up for what matters and staying committed to the work ahead and that’s exactly what this budget does,” said Burridge.

Interim Liberal leader Hal Perry was less enthusiastic in his response, calling the budget “a failure of management and imagination.”

“That forecast deficit is even larger than the one projected during the worst part of COVID, when the former premier described our economy as being in a depression,” said Perry.

The Island’s previous largest operating deficit was $172.7 million forecast in fiscal 2020-21.

This report by The Canadian Press was first published April 10, 2025.

Keith Doucette in Halifax, The Canadian Press