Nova Scotia’s projected budget surplus is being chipped away by falling income tax revenue and the rising cost of health care and ferry service subsidies.
In a fiscal update released Wednesday, the province estimated a surplus of $27.3 million for 2018-19 – $7.2 million less than the estimate provided earlier this fall, on a budget with revenues of $10.8 billion.
The update also noted that income tax revenue had plunged by $110 million, prompting suggestions from the Tory opposition that the province’s economy is starting to sputter into low-growth mode.
Tory justice critic Tim Halman argued that without additional federal transfer payments of $27 million coming in earlier this month, the province’s projections of a series of surplus budgets would be in jeopardy.
However, Finance Minister Karen Casey said the various shifts in revenues and costs are being watched carefully, and she remained confident of a surplus come next March.
She also emphasized the estimated surplus is still down just $2 million from the original budget estimate for a $20.4 million surplus as of March 31, 2019.
“We know there are many moving parts, changes in revenue … It’s our responsibility to ensure we manage those and keep our eye on the surplus,” said the minister.
“We need that to give us the flexibility for when we have to respond to demands that come from … departments for increased services.”
Casey said the rising cost of health care is difficult to project, as the province’s population continues to age and the Nova Scotia Health Authority treats a variety of complex illnesses.
But NDP leader Gary Burrill said the failure to spend the surplus on needed social services – such as increased numbers of long-term care beds – causes spending to rise in other parts of the health care system.
He calls it a “hyper-focused obsession with putting money in the bank.”
“Because of the lack of investments in new nursing home beds, we see hospitals unable to function the way they should function and emergency services not working the way they were set up to function,” he said.
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Burrill said if he were premier, he would immediately restore $5 million in annual operating costs to the long-term care facilities.
Health spending was $105 million over budget, with over half of that due to rising demand for health services provided by the Nova Scotia Health Authority.
Meanwhile, cannabis tax revenues were $6.3 million lower than expected, mainly due to the delay in the rollout of the legalization and supply shortages.
The Department of Internal Services has received an additional $14 million to upgrade its computer systems, including health information technology services.
The Department of Transportation has received an additional $9.9 million, “primarily due to the Nova Scotia to Maine ferry costs,” the Finance Department said.