New Brunswick is now projecting a surplus nearly $800 million larger than set out in last March’s budget.
After seeing continued growth in tax revenues through the third quarter, and limited growth in expenses, the province now expects to run a surplus of $826 million. That figure would set a new record, beating last year’s surplus of $777 million.
“Today’s results are largely consistent with what was presented at the time of the second-quarter fiscal and economic update, and reflect continued strength in the provincial economy,” said finance minister Ernie Steeves.
Revenues are projected to be at least $1 billion more than they were in March, driven in large part by $468.2 million more in corporate income tax and $423 million more in personal income taxes than originally projected.
Expense projections have risen at a much slower rate and are $240 million higher than budgeted.
Steeves also announced the creation of a $300-million “New Brunswick Advantage Savings Fund,” the interest of which will be used to fund various different priorities based on the recommendations of a steering committee. It’s projected to generate $13 million this year which will be spent next fiscal year.
“So what this does is gives us another maybe $13 million in interest payments to strategically spend on something that’s appropriate. It could be energy, it could be housing, it could be any number of things. There’s a lot of needs in the province and absolutely we know that,” he said.
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Whether or not the program constitutes a new fund is debatable, however.
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“It’s just liquidity management, that’s all it is,” said Liberal finance critic Rene Legacy.
“In the general bank accounts of government there’s always over $300 million in there, always. So essentially, it’s just a change in how to manage that fund, there’s no new amounts.”
During a technical briefing with reporters, department staff said that the fund won’t be consolidated anywhere within government. Basically, the fund is made up of the cash that the government has on hand at any given time to meet payroll obligations and other expenses. That cash generates interest which is often used to service the debt, but will now be used for spending in other areas.
Finance and treasury board assistant deputy minister Pete Kiely told reporters that the cash isn’t being set aside into a separate fund. That means the money isn’t being put into the expenses column and still counts towards the budgetary surplus and a reduction in the net debt.
“What we do is we maintain certain cash balances that we use to fund government daily. Those generate short-term interest earnings on investments. What we’re doing is we’re not moving this money into a fund,” Kieley said.
“What we’re doing is starting in the 23-24 budget year, we are going to basically determine the interest that $300 million would generate, and we will use that to fund particular investments going forward, of which there’ll be a committee that will look at and decide on those investments.”
Green leader David Coon says it appears the government is trying to look like it’s making investments, without putting up the money to do so. He’d like to see additional money pulled from the surplus and put towards various needs in the province.
“We need to increase social assistance for the most vulnerable; we need two new treatment centres for addictions, one in the Fredericton area, one in the Moncton area; we need to stand up urgent care centres attached to our hospitals … to solve the ER crunch to end the situation where people have been dying in waiting rooms; we need to put financing in place for affordable housing to enable non-profits and co-ops, faith communities and community groups to build the housing that people desperately need,” he said.
“There are tremendous needs. The money is there it needs to be invested now.”
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