03/21/2012 08:20 EDT | Updated 05/21/2012 05:12 EDT

Ghiz worried federal budget will hurt Island economy

P.E.I. Premier Robert Ghiz is anxious about next week's federal budget.

His fear is that Ottawa will pass its deficit problems down to the provinces.

Ghiz is worried about federal job cuts and what it could mean to the Island economy.

"We've got a lot of federal jobs in the province and that's an area where I'll be keeping my eye on what's happening with the budget," he said.

"Now I did meet with the prime minister recently and I did stress the importance of the federal jobs on Prince Edward Island in relation to our economy."

"In downtown Toronto, federal jobs do not mean what they mean here in Prince Edward Island — or in Ottawa even, they don't mean what they mean here on Prince Edward Island. So I hope that they factor that in. There's not a one size fits all."

Ghiz said that Ottawa's revenues are improving at a faster rate than the province's, and he's hoping the federal budget will take that into consideration.

The Island’s provincial deficit will be $75 million to $ 80 million this year, he said, and will be higher again next year.

The deficit would be even higher, Ghiz said, without major action such as the three to five per cent department budget cuts the province has planned.

The province is also cutting funding to 12 municipalities.

Overspending is problem, Crane says

Opposition Leader Olive Crane believes the deficit is higher that Ghiz is admitting, and the premier can’t control his government’s spending.

"He continues to overspend, so it doesn’t surprise me that he has put P.E.I. into such a terrible position with the fifth deficit in a row," she said.

Crane said she believes that Ghiz will try to get the province’s finances back into the black by instituting the harmonized sales tax.

Federal sources say Ottawa has offered P.E.I. $45 million to transition to HST, and that the province has asked for $100 million.

Ghiz would not confirm those figures.

"I would not know. Right now, I’m waiting to find out what the final numbers are. I know our number is probably higher than what the federal number is, but these are negotiations. I’m not going to release that information," he said.

"I have not seen any specific numbers from the federal government."

Crane said everybody knows the premier has been negotiating the HST for the past two years.

Ghiz said that his government is still saying no to the HST, but "we’ll continue to look at things into the future, and the Oppostion should know full well that the HST is good for the economy."

P.E.I.’s budget will likely come down in late April.