With revenues down and spending up due to a slowing economy, Nova Scotia is forecasting a record deficit of $1.2 billion for the current fiscal year.
The figure, released Monday by Finance Minister John Lohr, is significantly higher than the $697.5-million deficit projected in February’s budget.
Lohr said provincial revenues have dropped $44.9 million due in part to decreases in population growth and consumer spending.
But he stopped short of saying whether the government would need to tighten spending.
“It is concerning, but we know that we were elected in 2021 to fix health care and we see largely these costs being in the health care sector … we are committed to meeting the needs of Nova Scotians. In terms of how this affects future budgets, I can’t predict that right now,” the minister said.
Officials said the province’s real GDP growth rate is projected at 1.4%, down from the 2% forecast in the budget. Flat population growth of 0.9% has also affected labour force and employment numbers, while global trade shocks due to tariffs — especially Chinese tariffs on seafood — have slowed export growth.
Despite that, officials said the government still had not used a $200-million reserve fund included in the budget to offset revenue losses from tariffs.
Government spending, meanwhile, is up $503 million more than forecast, primarily in the health sector, which accounted for $410.9 million in additional spending, mainly due to increased staffing and inflationary costs.
Health spending now accounts for 46% of the overall budget at $8.3 billion this year, finance officials said.
Lohr was asked whether that kind of health-care spending is sustainable.
“I think that if you look across the nation that would be very close to a typical number,” Lohr said.
He added the government is making investments he believes will pay off in the future.
NDP Leader Claudia Chender noted the government in recent years has projected deficits only to end up with small surpluses.
“This government has become masters of what I can only call creative accounting. We never know if a projection is going to swing wildly in one direction or another,” Chender said. “But the bottom line is we have the most spending in history and we don’t have a lot to show for it.”
Interim Liberal Leader Derek Mombourquette said having a deficit of more than $1 billion is significant for a province of just over one million people.
“They need to start looking at ways that they can actually grow the economy … this is generational debt that we are taking on,” he said.
Officials noted the net debt as of March 31 was $20.84 billion, $1.7 billion higher than the previous fiscal year. That was mainly due to an accounting change that saw $879.9 million in government loans for long-term care recognized as tangible capital assets on the books.
Meanwhile, Lohr said the province ended the last fiscal year with a surplus of $264.8 million, up from a projected deficit of $467.4 million.