New Brunswick’s finance minister revealed Tuesday that the province is on track to post a record deficit of $1.3 billion, saying it will likely be several years before the budget lands back in the black.
“If you’re asking me within this mandate, if we’re going to get back to balanced budgets from $1.3 billion, it’s going to be extremely difficult,” René Legacy told reporters during the third-quarter update on the province’s finances Tuesday morning.
“What we need to do right now … is we just need to get that curve going back the right way. We need to start bringing down that deficit to a point where it’s manageable.”
The $1.3-billion projected deficit is almost $800 million larger than the $549-million shortfall Premier Susan Holt’s Liberal government announced in its first budget in March 2025. It was tabled about five months after the Liberals won the 2024 election and ousted the government of former Progressive Conservative premier Blaine Higgs.
Health care costs are the biggest deficit driver, at $432.5 million over budget. The Department of Social Development is now $127.1 million over budget due to increased demand on income security, child welfare and seniors programs.
While expenses are climbing, tax revenue is expected to drop significantly. Corporate income tax is down $139.2 million from the budget, personal income taxes have dropped $107 million and HST revenue is about $74 million less than expected.
Legacy says the province has seen unprecedented population growth in recent years and the bills for accommodating all those extra people are coming due.
“We had that extra 100,000 people come into the province, (and) even if our growth is flattened, they’re still there,” said the minister. “We’ve still gone from a province that had 750,000 and we now have 850,000. We have to make sure we provide the services for that new growth in population. We’re still trying to catch up.”
Progressive Conservative finance critic Don Monahan said Tuesday that the Liberals added $1 billion in new spending in their first budget with no plans on how to pay for it. He noted there’s another quarter to go before the fiscal year closes, so the deficit may continue to grow.
“This is the largest deficit that we’ve seen in the history of the province and we’re indebting our future generations,” he said in an interview.
Legacy said that New Brunswick already has some of the highest taxes in the country and the government is not seriously considering raising them.
“When we’re looking at (an) almost double-digit per cent increase in expenses, we feel we can look at that side of it more first before we look at tax increases,” said the minister.
Holt warned New Brunswickers in her state of the province address last month that cuts to government spending would be coming, and the finance department has since released a discussion paper seeking public input ahead of the next budget. Options include cutting the size of the 13,000-employee civil service, consolidating government agencies, selling government buildings and properties, an overhaul of the property tax system and placing tolls on out-of-province vehicles.
Monahan called the consultation process “smoke and mirrors” designed to make the public feel like they’ve had a say. He said government departments have already developed their fiscal plans and there’s not enough time for public representations to have an impact on the March 17 budget.
The province’s net debt was $12.3 billion at the beginning of the fiscal year. It’s now projected to rise to $13.9 billion by year’s end.