Prince Edward Island’s finance minister is projecting a record deficit in the provincial budget for a second year in a row.
Jill Burridge introduced the 2026-27 budget in Charlottetown on Tuesday with a $410-million shortfall, the largest in provincial history. It’s more than double the $184-million deficit the Progressive Conservative government tabled last spring, which was a record at the time.
“This budget delivers real relief directly into Islanders’ pockets,” Burridge said in a statement. “It reflects the choices we are making to focus on what matters most right now, helping Islanders manage the rising cost of living, strengthening our health-care system and continuing to invest in education, while managing our fiscal responsibilities carefully.”
Premier Rob Lantz’s government plans to spend about $3.8 billion this year, about 7.6% more than last year’s budget.
Revenue is projected to rise 1.3% to $3.4 billion.
The budget proposed a new personal income tax bracket, with a rate of 20%, for taxable income over $200,000, beginning in 2027. Currently, a rate of 19% applies to income above $142,250.
As a result of the proposed change, the combined top marginal personal income tax rate for 2027 will be 53% for regular income, 37.92% for eligible dividends and 49.07% for non-eligible dividends.
Spending details
The budget contains about $321 million to help Islanders with affordability, including a new $26-million program to help low- and middle-income earners offset the cost of essential expenses. There’s an extra $4.5 million to enhance the provincial child benefit and $81.6 million to maintain daycare costs for parents at $10 per day.
Health-care spending is projected to rise by 14.2% to $1.4 billion.
The government is planning to spend $5 million on 85 new long-term care beds. The budget also includes $30.9 million to beef up recruitment and retention of health care workers, $76 million to support access to medications and $15 million to increase home-based health care for seniors.
The government is committing $61.4 million to support trade and market development for businesses. There’s also $6 million to support the oyster industry which has been reeling from the presence of diseases in the animal population.
In her budget speech, Burridge said international exports reached a record high of $2.6 billion last year, a 1.8% increase. She said exports to the U.S. were up 8%, making P.E.I. the only province to see growth in the American market.
“The decisions we take now will shape the strength of our health care system, the opportunities available to Island families, and the kind of province we are building for the years ahead,” Burridge told the legislature.
Liberal Leader Robert Mitchell said in a statement that the budget reinforces a pattern of overspending and rising debt from the Progressive Conservatives.
“Prince Edward Island doesn’t have a money problem. It has a government with a spending problem,” Mitchell said.
“After seven years of this (Progressive) Conservative government, Islanders are still waiting for results.”
Green Party Leader Matt MacFarlane said Islanders are struggling financially while public systems need investment. He said the government could have started to curb the deficit without impacting the services Islanders depend on, but chose not to.
“The premier and his ministers … have continued to allow our deficit to grow to alarming amounts, and perhaps most disappointing, they’re not doing the hard work, along with the spending, to ensure that it translates into improvements for Islanders,” MacFarlane told the legislature.
The government also said that last year’s deficit, originally projected at $184 million, is now expected to hit almost $450 million.
After the current fiscal year’s $410-million deficit, the government is projecting $386 million in red ink for 2027-28 and another $338-million shortfall the following year.
The net debt is expected to grow from $3.7 billion at the start of the current fiscal year to almost $4.9 billion by the beginning of 2028-29.