Newfoundland and Labrador's debt has been steadily climbing since 2012, but the annual auditor general's report notes that a dubious milestone was reached this year: the highest per-capita debt in provincial history.

As of March 31, 2018, a report released this morning said the province's per-capita debt was $27,761 — that's $27,761 for every person here. The total net debt at the time was $14.7 billion, an increase of $1.1 billion from the year before and also the highest in provincial history.

"This represents a significant financial burden attributed to each and every Newfoundlander and Labradorian," notes Julia Mullaley in the report.

Deficit shrinking but still significant

Even though the deficit has shrunk in the last couple of years — $900 million for 2017-18, less than half of more than $2 billion in red ink in 2016 — it's still at a significant level.

Overall and per-capita debt will be even worse next year, with a forecast deficit of $500 million for 2018-19. The report predicts per-capita debt next year will be $29,256, and increase in the years after that, before levelling off in 2022-23 — that's if the province returns to a surplus position as planned.

But Mullaley told CBC that the target date for surplus relies on a lot of assumptions and risks that might not pan out as hoped.

"Government is predicting continued increased production in oil and increased prices through this forecast period," she said.

Little option but to cut spending

"As we all know, those particular sources of income are volatile, and they're really not under the control of our government, so there's downside risk, and we certainly saw more evidence of that in recent years."

The province's borrowings are also high right now, said Mullaley, so with taxes and borrowings already high, the only option the government has to return to surplus is by cutting spending. Government forecasts cutting spending by $400 million over the next four years, which won't give it much wiggle room if revenue projections are off.

"We do have a fairly high tax burden right now, so the room to increase that — and we've seen those increases over the last few years — that's a difficult area to go in, not a lot of room there," she said.

Finance Minister Tom Osborne says the province will return to surplus with a balanced approach to budgeting and won't 'dig any deeper into people's pockets.' (Katie Breen/CBC)

Finance Minister Tom Osborne acknowledged Mullaley's claim that the budget contains risks, but said the government is focused on getting back in the black.

"The province faced an unprecedented fiscal challenge in late 2015, early 2016, and getting back to surplus does have some challenges," he said. "We don't control the rate of inflation, consumer price index, we don't control oil prices, for example."

Asked if cutting another $400 million in the four years is doable, Osborne says the government has been chipping away at spending through several initiatives, including reducing the number of vehicles of the government's fleet, reducing the amount of leased space and the elimination of severance payments in the public sector.

'Not going to dig any deeper into people's pockets'

"It's like planting trees. Each of these initiatives is a tree. We're now seeing the fact that we've got a number of trees, it's starting to look like an orchard, and it's starting to bear fruit, but we've got to be patient."

Osborne said finances are improving.

"We're not going to dig any deeper into people's pockets. We're not going to drastically cut services and have an effect on people. We've been doing this through a balanced approach and we'll continue to do that."

Another ignominious honour in the report: the deficit-to-GDP percentage — which measures the deficit against the size of the economy.

It now sits at 2.8 per cent, the highest in Canada. The forecast percentage for next year is 1.6 per cent — an improvement, but still expected to be higher than the average of the other provinces.

That percentage could have been worse, but the province generates the most revenue — per capita — than every other province.

Still per-capita spending is "substantially higher" in Newfoundland and Labrador than in any other province, notes the report, and the provincial tax burden is one of the highest in Canada.

"This suggests that revenue is not the primary issue creating the deficits but the level of spending," says the report.

Read more from CBC Newfoundland and Labrador