HALIFAX – In what’s become a September pattern in Nova Scotia politics, the province’s finance minister is again projecting a bigger deficit than estimated in the spring budget.
However, unlike what’s occurred in the past two years, Finance Minister Allan MacMaster says there are signs the flow of red ink won’t be reversed by higher-than-forecast revenues as the year progresses.
MacMaster announced Friday the deficit forecast for the 2024-25 fiscal year has increased $187 million to $654 million on his $16.7 billion budget, due to higher department spending and a slowing flow of tax revenue.
The finance minister says he sees “notable” symptoms of a slowing economy, as tax revenues are forecast to be about $70 million less than anticipated in the spring budget. Those symptoms include a $44-million drop in harmonized sales taxes due to a decrease in consumer demand, according to the documents released Friday.
“What is notable is … the fact the provincial source revenues are down,” MacMaster said, adding this is “something consistent across the country and the economy is starting to cool.”
Still, he said it will require more detailed tax information later this fall to determine if the trend of decreasing tax revenues continues.
Assumptions in the spring budget on the number of new taxpayers coming on the rolls due to population increase were optimistic. In the 2022-23 fiscal year, the province’s population was growing at a rate of 3.5 per cent. But recent figures received by the Finance Department showed a growth rate of 1.88 per cent between July 2023 and July 2024, officials said Friday.
Consumer spending has also been slowing. In April, the province forecast household consumption would grow at 4.7 per cent, but it has actually been going up at a rate of 3.5 per cent.
The forecast includes about $243 million more in spending than forecast, including measures that weren’t announced or anticipated in the spring budget.
The provincial government has overestimated its deficit by wide margins in recent years and has made a number of spending announcements outside the spring budget process — drawing critiques from the auditor general for public money spent without the same legislative oversight that the budget receives.
The latest forecast includes a suite of “additional appropriations” — expenses or programs that weren’t included in the spring budget — most notably $178.4 million for health spending. Higher health costs include $111 million for Nova Scotia Health, increases of about $34 million for capital projects, and $28 million for a recent contract with paramedics.
The Health Department has also had to spend $17.8 million more than forecast on travel nursing, due to unanticipated vacancies.
Public Works spending has gone up $23 million, including $17.8 million for storm damage. Debt servicing costs have increased $31 million since the budget was tabled.
NDP Leader Claudia Chender said she lacks confidence in the government’s figures after three years of dire deficit forecasts in the fall that later became surpluses.
“We’re seeing … a deficit that may not be a deficit, and a ton of spending that’s outside of the actual budget process, much of which is not particularly urgent,” she said.
Keith Irving, a Liberal Party member of the legislature, said, “No departments are sticking to a budget.”
This report by The Canadian Press was first published Sept. 27, 2024.
