One-time federal transfers to help New Brunswick manage the COVID-19 pandemic have led to a bigger-than-expected surplus last year and are keeping the province in the black this year, Finance Minister Ernie Steeves said Wednesday.
Instead of a projected surplus of $92 million for the 2020-21 fiscal year, the government recorded a surplus of $408.5 million, Steeves told reporters. It’s the fourth consecutive annual surplus, he added.
And for the 2021-22 fiscal year, the government is projecting a $37.7-million surplus instead of a budget deficit of $244.8 million _ all thanks to money from the federal government, Steeves said.
According to the update, revenue for the current fiscal year is projected to be $289.7 million higher than budgeted, and that includes $148 million in one-time federal funding.
“This is about federal transfers,” Steeves said. “We can’t count on this going forward _ this is one-time funding.”
But the province’s economy is showing signs of strength, he said.
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The government has so far collected another $72 million in personal income tax revenue and an extra $48.6 million in harmonized sales tax revenue from what had been budgeted in March.
Steeves, however, said the fourth wave of the COVID-19 pandemic is causing financial pressures, because of the cost related to
COVID-19 hospitalizations. As of Tuesday, 63 New Brunswickers were hospitalized with the disease, including 27 in intensive care.
“It’s very challenging to predict what will happen next in the pandemic,” Steeves said. “As we continue to fight through the fourth wave of COVID-19, we know that this elevated level of uncertainty will persist and we cannot rely on one-time federal supplements and supports in the future.”
Despite a fourth consecutive surplus, Steeves said now is not the time to start making changes to taxes.
“Right now, I’m certainly not going to add any new taxes but I certainly can’t reduce any taxes at this moment,” he said. “The whole situation is too volatile. We don’t know what’s going to happen with this fourth wave.”
By the end of March 2022, the province’s net debt is expected to be $13.4 billion _ an improvement of $701.3 million over the budget projection.
Liberal finance critic Rob McKee said Wednesday he has a problem with the province posting large surpluses.
“In normal times I would say this is great news, but we’re not in normal times,” he told reporters. “We are still facing a pandemic, and even without a pandemic we are in a state of health-care crisis and long-term care crisis. How do you justify to New Brunswickers the surpluses while we are in a state of crisis and the pandemic that we are facing in the province?”
McKee said the province can no longer argue it is in a precarious financial position and needs to get back to the bargaining table with the 22,000 members of CUPE who are in a legal strike position.
The union has been seeking a wage increase of 20 per cent over four years, but Premier Blaine Higgs has said that’s more than the province can afford.
McKee said he doesn’t know the details of the bargaining situation, but said the province needs to offer a livable wage.
This report by The Canadian Press was first published Oct. 13, 2021.
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