N.B. deficit soars to $820M on higher spending
The New Brunswick government is now expecting an $820.4-million deficit as government spending grew substantially according to Finance Minister Blaine Higgs.
The former Liberal government had anticipated a $747-million deficit but that is growing to $820.4 million in 2010-11 and Higgs said the debt will hit $9.6 billion.
"As a province, we are facing an unprecedented fiscal challenge," Higgs said. "Without corrective action, the deficit could approach $1 billion by next year, and a net debt that could grow to $15 billion by 2015. This is not sustainable."
The deficit grew by $71.6 million as spending ballooned by $142 million more than expected.
The province received $70.4 million more because of income tax underpayments and increased tobacco tax revenue from a tax settlement.
The finance minister is about to start a series of pre-budget consultations.
The Progressive Conservative government has already asked departments to trim their budgets by one per cent in the current fiscal year and plan to reduce them a further two per cent next year.
Higgs told the legislature the province "requires timely and sustained discipline."
"The consequences of inaction are dire: the longer we ignore the fiscal challenge, the more pronounced it will become — taxes would need to be raised even more and spending cuts made even deeper in the future if we do not act decisively now," Higgs said.
The increased cost pressures outlined in the fiscal update are being blamed on the departments of health, social development, education and debt payments.
Also Higgs said there were additional projects funded through the Regional Development Corp.
Opposition Leader Victor Boudreau said on Thursday the Tories had not effectively outlined a strategy to battle the growing deficit.
Boudreau said the throne speech, which was delivered on Tuesday, spoke briefly about the fiscal crisis and then recapped the many costly spending promises made by the Tories in the fall election campaign.