Premier Brad Wall is warning the world oil price slump means the Saskatchewan government will face a budget shortfall of between $600 to $800-million this year.

Mr. Wall told Saskatchewan Urban Municipalities Association delegates Monday that the shortfall amounts to about seven per cent of the province's revenue.

He says that means spending cuts are likely, because he says his government is not willing to increase taxes or run a deficit.

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In its last budget update in November the province was projecting a $70.9-million surplus for 2014-15.

Mr. Wall stressed that the bloodbath in the oil markets hasn't hurt Saskatchewan's economy nearly as much as neighbouring Alberta.

He noted that Saskatchewan is benefiting from a strengthening potash market, good performance from the agriculture sector and increased exports because of the lower value of the Canadian dollar.

Mr. Wall says cutting revenue sharing to municipalities is possible.

Every year municipalities receive a 20 per cent share of the provincial sales tax.

This year that would work out to around $256-million.