Nova Scotia budget update reduces deficit by $220M, mostly due to higher tax revenue

HALIFAX — Nova Scotia’s budget deficit for the current fiscal year is now projected at $247.5 million — almost $220 million less than estimated in last February’s budget.

Finance Minister John Lohr released the figures on Friday in a budget update, the second since September, when the province forecast that the deficit would be $654 million at the end of this fiscal year. February’s budget estimated the deficit would be $467 million.

Lohr says the deficit has been reduced because the government expects to collect $642 million more in revenue — for a total of $16.5 billion — in 2024-25, mostly from provincial taxes. The tax revenue growth in recent years is mainly the result of a steady rise in the province’s population, although Lohr said population growth would soon flatten out.

“Population is still growing but at a slower pace,” Lohr said. “Population growth is still important to the prosperity of this province and we still need to attract people to build our homes and work in our hospitals.”

According to a Finance Department document, the expansion of the province’s population is forecast to decelerate to 0.9 per cent in 2025 and 0.9 per cent in 2026, before slowing to around 0.5 per cent per year over the next 10 years.

Lohr added that the revenue growth this fiscal year would be offset by an increase in expenses of $440.6 million compared to what was estimated in the February budget, mainly due to spending on health care and cost-of-living support programs. As well, the federal government’s temporary suspension of the harmonized sales tax is expected to cost the province around $82 million.

“We are in conversations with the federal government on that,” Lohr said in response to a question about whether the province would ask Ottawa to reimburse lost HST revenue.

Meanwhile, the government spent another $253 million on measures that weren’t included in February’s budget — meaning the spending wasn’t approved by the legislature — on such things as local film production, grants for community projects and health labour contracts.

To date, the extra-budget spending totals about $700 million this fiscal year, after exceeding the $1-billion mark during each of the government’s previous two budget cycles.

Lohr was asked whether he might alter what had been an aggressive approach to extra spending by his predecessor, Allan MacMaster. “If there are opportunities to invest more and we see needs in new areas we will continue to be flexible, we will continue to address the needs as we meet them,” he said.

NDP Leader Claudia Chender said it appears the government is on track again to spend $1 billion outside of the budget process, something she said is concerning as the province faces possible headwinds, such as the projected drop in population growth and potential United States trade tariffs on Canadian goods.

“There is no reason … to engage in this sort of backroom process of cutting cheques throughout the year that aren’t accounted for,” Chender said.

Liberal house leader Iain Rankin said he’s concerned the update didn’t include planning against potential threats such as tariffs from the U.S., given that two-thirds of provincial exports go south of the border.

The budget update was the first presented by Lohr, who took over the finance portfolio when the Progressive Conservative government’s new cabinet was announced last week following the Nov. 26 provincial election.

This report by The Canadian Press was first published Dec. 20, 2024.

Keith Doucette, The Canadian Press