Province's deficit projection $44M higher than a month ago because of COVID-19

New Brunswick's coronavirus-ravaged financial outlook is getting worse.

Finance Minister Ernie Steeves confirmed Wednesday that this year's budget deficit is now projected to be $44 million higher than the estimate from just a month ago.

In May, Steeves forecast a deficit of $299.2 million because of higher spending and tumbling revenue attributed to the COVID-19 pandemic.

Since then, his department has revised its numbers. The reopening of some businesses will mean $30 million more in revenue than expected last month.

But at the same time, spending is now projected to be $74 million more, pushing the deficit projection to around $343 million.

"All of our extra expenses so far are related to COVID," Steeves told a committee of the legislature looking at budget estimates for the current fiscal year.

He said he hopes the bleak financial picture will start to improve as the provincial economy continues reopening.

"We do expect better numbers as the casino [in Moncton] and other entertainment venues open up and other businesses continue to open up, and there'll be a number of them coming up just in the next few days," he said.

But he said it's unlikely the government can recover enough to get the budget back to balance in the current fiscal year.

"I would say that's a fait accompli — there's going to be a deficit this year."

The province had been projecting a $92.4 million surplus for this year before the pandemic.

Spend to help businesses

The Opposition Liberals used the growing red ink to repeat their calls for more government spending to help businesses that haven't been able to get back to normal operations yet.

Finance critic Roger Melanson said one reason tax revenue is still falling short is some companies are still fully or partially shut down because the province hasn't helped them.

"In the long term, if those businesses are still not in operation after COVID's behind us, it's going to be a very difficult situation for the provincial government to generate the level of revenue that is needed," he said.

Steeves said while he's concerned with that, he's also worried about saddling future generations with "more crushing debt."

Provincial economy leading the way

The minister tried to paint an upbeat picture of the provincial economy.

He cited figures from the Canadian Federation of Independent Business that 70 per cent of employers in the province are operating again, 29 per cent have revenues back to pre-pandemic levels and 45 per cent have staffing levels back to normal — all the highest levels in Canada.

"We're number 1 in Canada," he said. "I'm terribly proud of that."

But Melanson said the 30 per cent of businesses that are not operational again in the province are a big chunk of the economy, and more public spending programs could help them.

He said the province's $50 million in aid to businesses announced already was in the form of loans that those companies will eventually have to repay.

"When a company has a cash-flow issue, a loan doesn't help because it's adding a financial burden on them in the medium and long term. It may still not help them to survive," he said.

Emergency benefit cost $42M

Steeves also revealed Wednesday that the short-term New Brunswick Workers Emergency Income Benefit, put in place to help laid-off employees until federal programs were up and running, cost taxpayers $42 million.

He said 67,923 people had registered for the one-time $900 benefit and 40,451 were approved to receive it.

The $42 million expense, announced on March 24 in the final week of the 2019-20 fiscal year, will be accounted for in that year and so it won't affect this year's deficit.

But it will reduce the $97.8 million surplus the province booked for 2019–2020. Final audited statements for that year are expected later this summer.