New Brunswick’s projected deficit has ballooned by $800 million since the spring budget and now sits at $1.33 billion — making it the highest in the province’s history.
Finance Minister René Legacy released the third-quarter fiscal update on Tuesday, saying it’s vital for the province to control its expenses and generate new revenues because “the status quo is not sustainable in the long-term.”
“We are in a very different fiscal environment than we were a year ago, and while elements of the provincial economy have been quite resilient, growth is slowing, costs are rising and the uncertainty with trade and tariffs is having an impact on how we must plan for the future,” he said.
Legacy said total expenses are projected to be $407.3 million over budget because of higher spending in health and social development.
At the same time, total revenue is expected to be $372.1 million lower than budgeted, in large part due to revenue reductions in corporate income tax, personal income tax and harmonized sales tax (HST).
“The reality of this whole situation is, a couple of years ago, we had 100,000 people move into this province and increase our revenue. The revenue generation came in immediately but an extra 100,000 people in his province obviously brings its costs. The costs are coming in now,” he said.
“We’ve seen the revenues in the last couple of years. We’re starting to see the expenses now.”
The province’s budget released last March had a projected deficit of $549 million. That projected deficit grew with each quarterly fiscal update and was last pegged at $834.7 million.
As for whether Legacy expects the fourth quarter results to have an even higher deficit, he said he’d love to have an answer but “I don’t have that crystal ball.”
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“All we can do as a government right now is to try to shift that trend of expenses to flatten out the curve and get some control on it,” he said.
Furthermore, Premier Susan Holt campaigned in 2024 on the promise of a balanced budget, which was Legacy’s mandate. Fourteen months later, he said the initial goal is “going to be extremely difficult.”
But while the province is looking at cutting costs, Legacy said higher taxes aren’t on the table.
“We are pretty much one of the highest tax jurisdictions in the country, so we have not looked at it in earnest, to be honest. We’d rather not,” he said.
PC finance critic Don Monahan called the update “a bad day for our future generation.”
“So now, we have to spend more money financing the debt, so there’s going to be less money available for education, health care and social programs because we have to finance the debt,” he said.
“At the end of the day, that’s not good for New Brunswickers.”
The next fiscal update is scheduled for March 17.
Premier had warned about ‘difficult decisions’
During her State of the Province address two weeks ago, Holt said her government has a plan to transform the province’s economy but warned that it would require “difficult decisions.”
“We need you to help us identify the areas that we can reduce spending in order to fuel our health-care system and our economy,” she told the crowd on Jan. 30.
“In times like these, the riskiest thing you can do is do nothing. Our government is not going to do nothing.”
In response, opposition leaders slammed the government’s plan to curb spending.
Interim Progressive Conservative Leader Glen Savoie said that Holt’s Liberals have been driving up spending since winning the 2024 election and said they should be finding more efficient ways to run government.
Green Party Leader David Coon said the province should be investing in front-line services to reduce poverty, sickness and mental illness in order to make savings in the health-care and justice systems.
— With files from Global News’ Anna Mandin and The Canadian Press
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