P.E.I.’s finance minister is defending government spending following a searing report from the Auditor General’s Office saying the province must rein in its expenses.

Jill Burridge said the province is, essentially, living with a financial catch-22 — the Island’s schools, hospitals and other infrastructure need record investment to survive, which in turn means running deficits and accumulating historic debt levels.

“It’s not fair, necessarily, for today to have our children going into schools that are overcrowded, crumbling infrastructure, we don’t want to pass that on to them either,” she said.

“It’s a balance of looking at what they need today, but also certainly cognizant of the fact of debt and ensuring that we’re not putting undue burden on them into the future.”

Last year, the Progressive Conservative government projected it would run a deficit of $183.9 million for the 2025-2026 fiscal year — which would have been the largest in the Island’s history had it not then grown to more than $367 million by the end of the second quarter.

Since then, the PCs approved nearly $150 million in additional unbudgeted spending, which may push the deficit to more than $500 million by the end of the fiscal year.

Included in that are hundreds of millions in spending by way of special warrants, which are typically used to cover extra expenses during emergencies. At the time those special warrants were issued, they were not debated on the floor of the legislative assembly — a practice that Auditor General Darren Noonan has taken issue with in the past.

That reliance on special warrants, the AG’s report said, are “a concerning trend and still a sign of weakness in the appropriations process.”

“We don’t want to be putting forward special warrants. We only do it when we feel there are operational pressures we cannot ignore,” Burridge said.

“It’s not going toward things that aren’t core needs.”

AG report paints bleak financial picture

The auditor general’s report, published this week, is its latest annual review of the province’s finances.

The scathing report painted a bleak picture of the province’s finances, highlighting things like growing expenses for P.E.I.’s aging population, rising health-care costs, the Island’s reliance on federal cash transfers, as well as government spending more than $1.6 billion on major infrastructure projects through its capital budget.

Coupled with that, the report shows, are financial concerns through to 2031. The AG’s office projects P.E.I.’s net debt to double in that timeframe, the net debt to GDP to increase by 44 per cent and net debt per capita rising to $32,000.

Noonan was asked Thursday whether he believes government is doing well at spending taxpayer money.

“When you see deficits the size that they are and when you see capital spending exceeding the original capital budget amounts, it raises flags that perhaps they’re not,” he said.

The Parliamentary Budget Office had also rated P.E.I.’s finances as “unsustainable” in its August 2024 fiscal sustainability report.

In response to financial projections like that, government has updated its debt management strategy.

Burridge pointed to a yet-to-be -created “risk committee” that will advise government on policy, financial liabilities and more.

When asked whether she still has the confidence of Islanders as minister helming the province’s finances, Burridge said: “I hope so.”

“These are extraordinary times. This is tough. It’s almost like tectonic plates shifting and they’ve all ran into each other and it’s erupted all at the same time,” she said.

“We’re confronting it head on, but … I want Islanders to know that it resonates with me that we’re all worried. We need some guardrails, we need structure, we need discipline.”

P.E.I. Liberal Leader Robert Mitchell said government hasn’t been paying attention to its books over the past year.

He criticized the PCs for what he called “reckless spending.”

“We have a financial crisis on Prince Edward Island and we have a government that’s in personal survival mode,” Mitchell said.

“I’m losing my confidence in them, I think other Islanders are losing their confidence in them.”