New Brunswick deficit cut to $183M

The New Brunswick government cut the deficit in half to $183 million, using mostly a combination of program cuts, small revenue hikes and incremental reductions in the civil service.

Finance Minister Blaine Higgs had been warning citizens to prepare for difficult choices in the Progressive Conservative government’s second budget.

But there were no deep spending cuts and the Alward government has again avoided the need to increase the Harmonized Sales Tax or impose highway tolls.

"The grim fiscal situation our government inherited has resulted in a process of difficult decisions being made to start our province on the path to fiscal sustainability," Higgs said.

"New Brunswick business and citizens have advised us to return to balance by generating additional revenues through a combination of sustainable economic growth policies, raising fees or taxes where fair and efficient and reducing expenditures and increasing efficiency."

The projected $183-million deficit for 2012-13 is down from the $471-million deficit the provincial government is expecting for 2011-12.

New Brunswick’s debt is also increasing by $738.9 million, which will push the existing debt towards $11 billion. The debt is expected to hit $10.1 billion after 2011-12 finishes.

The finance minister is projecting the deficit will be further reduced to $99 million in 2013-14.

And Higgs is suggesting the provincial government will return to a surplus situation in 2014-15. If the budget plan is followed, the Alward government will enter its re-election year with a modest $6-million surplus.

Civil service cuts

Government renewal has been a constant theme for the Alward government for the last year.

Higgs said the provincial government estimates that 1,500 civil servants will leave the bureaucracy annually over the next three years. The finance minister said only the jobs that are in critical government services will be replaced.

There are no estimates given to what departments these employees will be retiring from.

Higgs told reporters that he expects two of three positions will be replaced.

The civil service reduction is estimated to save $86 million over that time.

The New Brunswick government has a total wage bill of $3 billion annually. The provincial government will continue its policy of instituting a two-year wage freeze.

New revenue

The Alward government is also raising a series of taxes intended to "improve the fairness of the tax system and correct inequities."

The Real Property Transfer Tax is being doubled to 0.5 per cent, a move that will raise $7 million in new revenue. The extra tax will start being levied on home buyers on June 1.

The Financial Corporation Capital Tax will be increased to four per cent from three per cent on April 1. The decision will allow the provincial government to reap roughly $5 million in additional revenue. The tax is on the assets of large corporations, such as banks and insurance companies.

The finance minister is also counting on the government being able to sell $10 million in Crown-owned assets, including the provincial plane.

"Over the coming months, the government will also examine the business cases for other divestiture opportunities such as the viability of owning and operating the government aircraft and an intensive review of government vehicles and related policies," Higgs said in his speech.

Cost-savings

The finance minister outlined a series of cuts and internal savings that have been previously announced, such as the $2.4 million in savings relating to the reduction of school districts to seven from 14 and the reduction of unconditional grants to municipalities.

There were other cuts that were highlighted in the provincial budget.

The province’s harness racing industry will see its funding cut by March 31, 2013. This will save the provincial government $600,000.

Individual government departments are also being asked to find ways to cut costs.

For instance, the Department of Natural Resources is anticipating it will save $1.5 million by reducing office space around the province.

"The increasing use of technology will allow [Department of Natural Resources] officers to work from their trucks instead of offices," he said in his budget.

"This will also allow for the more efficient use of staff time and will allow officers to be in the field where they can provide direct service to New Brunswickers."

Higgs said he believes these internal savings will help the provincial government avoid the need to hike taxes.

"We are confident of higher revenue from economic growth and that government renewal will continue to provide efficiency gains and improved business practices will lessen the potential for any increases in taxes," Higgs said.