Increased spending sees Nova Scotia budget deficit jump to $403 million

Health-care spending and disaster relief for extreme weather have helped push Nova Scotia's budget deficit to $402.7 million this fiscal year, an increase of $123.8 million from the figure forecast in the spring.

Finance Minister Allan MacMaster said the jump from the $278.9-million deficit estimate in the March budget is a reflection of the government's main priority: "to invest and transform our health-care system."

"We continue to work hard on that plan but we have also had to respond to unexpected events."

MacMaster said programs to assist with natural disasters accounted for one-quarter of the increased spending reflected in the budget update he released on Thursday. Overall, expenses increased by $363 million from the spring.

So far, the province has spent $60 million to assist with damage caused by wildfires in May and June, and $57 million for damage from flooding in July, although a portion of that cost will eventually be recovered through federal disaster assistance programs.

A new contract for nurses has taken $155.6 million from government coffers, while a new deal signed by the province's doctors cost $65.8 million. Another $34.4 million went to wage settlements with school support staff.

Revenues up $411M

Meanwhile, total revenues were up by $411 million — a figure that includes $232.3 million in new revenue from things like personal income tax and the province's motive fuel tax.

Since September, the government has spent about $623 million that wasn't included in the March budget — and not approved by the legislature. Last fiscal year, Premier Tim Houston's Progressive Conservatives spent a record $1.7 billion that had not been in the budget estimates adopted by elected officials.

MacMaster defended the spending, saying the government needs to have the flexibility to spend quickly when revenues increase in order to bolster critical areas such as health care and housing.

"There's been no secret made about it, we came to government wanting to fix the health-care system and saying we would spend to do it," he said. "We believe at the end of the day we will be accountable to the electorate, but we want to take action."

Economy 'stronger than expected'

Liberal finance critic Fred Tilley said the extra spending has made the spring budget process "a farce," adding that he likes the idea of requiring the government to produce a mini-budget in the fall, which would require the approval of the legislature.

"I think what we are looking for is something that we can look at and trust," Tilley said.

Despite the jump in the deficit, MacMaster said there are signs the government's fiscal picture could improve by the time he delivers his second budget update, in December.

"We see signs of [the economy] softening, but it has still been strong," he said. "The Bank of Canada is still looking at raising interest rates, so I think it's a sign the economy has been stronger than expected and our revenues may reflect that."