5 things to look for in today's budget

Brian Gallant’s Liberal government delivers its first budget today, and after months of tough talk about spending cuts and taxes increases, New Brunswickers will learn whether the reality matches the rhetoric.

This year’s deficit is expected to be $255 million, far below the forecast laid out in the last budget by David Alward’s Progressive Conservative government that was defeated in the election last year.

But that is thanks in part to a one-time injection of unexpected tax revenue transferred from Ottawa that won’t necessarily repeat itself in the 2015-16 fiscal year that begins on Wednesday. That could make it much more difficult to reduce the deficit further.

On Monday, Finance Minister Roger Melanson suggested the budget will hit all New Brunswickers in the pocketbook. Melanson's budget speech is scheduled to begin around 1 p.m. and CBC New Brunswick will livestream it from the Legislature.

“We'll see a difficult budget, but I think New Brunswickers understand that everybody has to play (sic) their fair share to address this financial situation,” he said.

“We are asking New Brunswickers — all of us as New Brunswickers — to help us, to really face the facts, and get to the position where we have a balanced budget so we can create the right conditions to see economic growth.”

Here, then, are five things to look for in the budget:

1. Taxes or tolls, or both, or neither?

Given Melanson’s comments, it’s the top question. The government repealed a PC law passed during Bernard Lord’s government that required a referendum to raise the harmonized sales tax, set up road tolls, or introduce a new tax. That doesn’t necessarily mean any of those will happen, but they’re now a lot easier to do. The Alward government looked at tolls but said the cost of establishing and collecting them would be so high it would defeat the purpose. Any of the options would be the single most controversial, headline-grabbing budget measure.

2. Where will the cuts be?

In recent weeks the Liberals have floated a range of ideas for cutting spending, from eliminating teacher jobs to closing small courthouses to converting small hospitals into much-needed nursing homes for seniors. But the government’s strategic review of all programs is still underway, and the Liberals have said the toughest measures will only show up in next year’s budget, after the review is finished.

3. What will the deficit be?

This year’s is $255 million, but the Liberal election platform predicted that the party’s spending promises and its establishment of a $150 million “contingency fund” — a cushion in case projections are wrong — would create a $482 million deficit in 2015-2016. If the government hits its targets, the cushion would not be counted at the end of the year, but in the meantime, it would give the Opposition an easy political target.

4. Where will health spending go?

Governments of both stripes going back to the McKenna era have talked about ballooning health costs as one of the biggest threats to balanced budgets. The last two PC budgets held health spending increases to two per cent a year, and health came in under budget in 2012-13 and 2013-14. The Liberals have to decide whether to maintain that trend.

5. Which departments will be eliminated?

New departments have been created by various governments: Human Resources became its own department under Bernard Lord, and Energy was split from Natural Resources under Graham. Tourism has been a stand-alone department for several years after having once dwelt under Economic Development; Alward created the Department of Healthy and Inclusive Communities. Gallant has already shrunk the cabinet to twelve ministers plus himself; he said when he announced the smaller cabinet that he would reduce the number of departments and deputy ministers “in the first few months” of his government.