Provincial auditor Fred Wendel says Saskatchewan's $9.3 billion accumulated deficit is "large" for a population of only one million people.

In his annual report, released on Thursday, Wendel said the government spent $654 million more this year than it raised in revenue, weakening its financial position and reducing government's ability to meet commitments in the future.

Agricultural assistance programs and fire fighting costs were the largest contributors to the deficit, the report said.

In 2003, crop insurance payouts increased to $1.1 billion, from $133 million in 2001, and fire fighting cost Saskatchewan $115 million compared to $37 million in 2001.

The report shows the province spent about the same amount of dollars on farm assistance as the federal government in 2003, and almost twice as much as Ottawa contributed in 2002.

"In the last two years, the government spent $1.1 billion more than it raised in revenue," noted Wendel. "A downturn in Saskatchewan's economy would require the government to make difficult decisions on revenue raising and spending," he warns

The reports shows the province is forced to spend almost as much to pay back the debt every year as it spends on the annual education budget. Interest payments on the debt will amount to $0.9 billion in 2003, or 12 cents of every dollar raised by the government, while the education bill is $1 billion in 2003.

The auditor describes the interest cost as "significant."

The auditor also complains that up to now, the government has refused to provide financial information for all the economic activity outside the general revenue fund. That means the public has no information for all the government business enterprises like SaskTel and Sask Power, he notes, although that will be rectified in the 2004-05 budget.

However the report does offer some good news, primarily that the province is in better financial shape than it was 10 years ago.

The province's interest costs have dropped almost in half from the high in 1993 when 24 cents of every government dollar was needed to pay the bill. Saskatchewan has the fifth lowest accumulated deficit per capita of the provinces.

The Saskatchewan economy has grown in recent years. Its gross domestic product increased by 61 per cent since 1991, from $21 million to $34 million in 2003. Between 1995-2001, the government was taking in more revenue than it was spending.

Compared to other provinces, Saskatchewan's accumulated deficit as a percentage of its gross national product was the third lowest in Canada in 2001, after B.C. and Alberta, which has no annual deficit.

"This means that the Saskatchewan economy is better able to sustain the demands placed on it by the government than most other provinces," reported the auditor.

The Dominion Bond Rating service has boosted Saskatchewan's credit rating from a low of BBB in 1991 to an A credit rating in 2003, giving it the same rating as Manitoba, New Brunswick, and Quebec. Only Alberta, Ontario and B.C. have a better credit rating among provinces.

The auditor also said the Saskatchewan government increased the net book value of its capital assets like buildings, equipment, roads and dams since 1996 by 12 per cent.

"(It is) is an important indicator because it measures the extent to which a government is maintaining or failing to maintain the capital assets needed to deliver its services," reports the auditor.

Saskatchewan has also moved from a province relying for 43 per cent of its revenue from the federal government, to a position where it relies on Ottawa for only 23 per cent of its revenue, in the form of health care spending and other grants. The auditor said this allows the province to be less dependent, and vulnerable, to revenue sources.

The auditor reports the province took in $231 million in revenues from its share of casino profits in 2003, compared to $27 million in 1994.