N.B. deficit projection jumps to $92.1 million, squeezing Liberal promises
Finance Minister René Legacy hedges on cost of nurse bonuses party committed to during campaign
The new Liberal government of Premier Susan Holt is adding some asterisks to its election promises as it faces a higher-than-expected budget deficit left behind by the previous Progressive Conservative government.
Finance Minister René Legacy released a second-quarter update for fiscal 2024-25 that projects a deficit of $92.1 million as of Sept. 30.
That is $132 million worse than the $40 million surplus that previous PC finance minister Ernie Steeves forecast in his budget in March.
And it's $64.5 million worse than the deficit Steeves himself projected in his final fiscal update at the end of August.
"These results represent a period when the previous government was in place," Legacy said.
To make matters worse, Legacy said, there are indications that the province won't collect a revenue windfall in the third quarter, which is when the federal government remits income tax and sales tax revenue it collects to the province.
The
updated projection is $132 million worse than the $40 million surplus
that previous PC finance minister Ernie Steeves, pictured here, forecast
in his budget in March. (Jacques Poitras/CBC)
In recent years, that revenue has been much higher than expected, leading to a series of record-breaking budget surpluses for the Higgs PC government.
But this year, "it doesn't look like we're going to be in previous years' situations, where revenues are just going to grow and take care of everything," Legacy said.
The shortfall may put the squeeze on some key Liberal election commitments.
The party promised $10,000 bonuses this year for nurses, nurse practitioners and licensed practical nurses as a way to persuade them to stay in their jobs.
That was expected to cost $74.3 million in 2024-25, Holt said while campaigning on Sept. 20, but Legacy wouldn't commit to that figure Friday.
"We have some major commitments that are to be done within the next legislative session," he said. "Some of those will be announced and the appropriate pricing and costing will all come along in the next coming weeks."
Green
Party health critic Megan Mitton says the Liberals must not sacrifice
investments in health care to keep their promise to balance budgets. (Ed Hunter/CBC)
Asked about the $74 million figure in the platform, the minister said, "we're still adjusting, we're still working it through, so when the final number comes in, we'll be announcing it."
Green Party health critic Megan Mitton said the Liberals must not sacrifice investments in health care to keep their promise to balanced budgets.
"I think New Brunswickers understand that it might make sense to put major investments right now in health care that are going to pay off longer-term."
Legacy suggested the Liberal promise to run balanced budgets during their mandate doesn't apply to the current 2024-25 fiscal year because it's covered by the PC budget Steeves delivered back in March.
"I am committed to balanced budgets in each year of our mandate, and of course our first budget will be '25-26," he said.
Notably, Legacy's mandate letter, in which Holt lays out what she wants him to do as minister, says he'll be measured on achieving a balanced budget in 2025-26 – "what we control," he said — but not this year.
Even so, the minister said he's asking officials to assess whether a "course correction" on spending is needed this year and to look for potential savings that can be found in various departments to reduce or eliminate this year's projected deficit.
Friday's update shows revenue forecast to be $118 million higher than expected, but that is more that wiped out by the projection that spending will be $251.8 million over budget.
That includes $193 million in unforeseen spending at the Department of Health, some of it the result of travel nurse contracts.
In a statement, Glen Savoie, the interim PC leader, said the projected deficit was being driven by health-care costs, and his party would be watching what decisions the Liberals make in the remainder of the fiscal year, given their campaign costing.
During the election, the PCs accused the Liberals of a $1 billion mistake in their platform costing.
ABOUT THE AUTHOR
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Perhaps our new Minister of Health can use his secret settlement with Higgy to help a few nurses in need of more money
Lou Bell
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It's become quite evident Ms. Holt is passing the buck on her cabinet posts and that blame will not be a part of what she will accept . The liberals are gonna need every MLA they have to fill the vacant Ministerial posts when they start to fail . And they certainly will
Allan Marven
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Pc's looking for new leader. good job for ya.
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David Amos
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I can act surprised if I want to
Reply to David Amos
Reply to Gordon MacFarlane
Reply to Gordon MacFarlane
If you prefer to believe that this government, having just read from the same script almost every incoming govt in Canada has read from for a century, is the first one that is sincere, feel free
Reply to Gordon MacFarlane
Reply to Gordon MacFarlane
Reply to Gordon MacFarlane
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Alex Stevens
Same game every election. Promise the world, then blame the books. The books are always 'cooked'. Every election, no matter which party. Same game.
Bob Palmer
Reply to Alex Stevens
Agreed
Denis Reagan
Reply to Alex Stevens
Them books could always use some foreign seasoning while cooking.
Larry McCarthy
Reply to Alex Stevens
Higgs would never "cook the books" for an election, eh?
David Amos
Reply to Alex Stevens
C'est Vrai
Corrie Weatherfield
well this is so surprising . . . but it is already more than 3 weeks with this wonderful new "team" before they started to back track and say . . . "but its not our fault . . . " wonder when we'll see the tax reduction on power bills now that the new 9 plus % increase is a go?
Denis Reagan
Reply to Corrie Weatherfield
This new team is not telling the truth? Explain?
David Amos
Reply to Corrie Weatherfield
We will have to wait until April Fools Day to see if they were joking or not
Bob Palmer
But but 2 weeks ago all was good what happened. I guess the previous gov could not add.(never heard that before)
Larry McCarthy
Reply to Bob Palmer
A budget "drafted" by Higgs and Co. for the election, perhaps?
David Amos
Reply to Bob Palmer
Surely you jest
James Wolf
Debt deth spiral starts.
Larry McCarthy
Reply to James Wolf
It already started under Higgs! Read the article, perhaps?
David Amos
Reply to James Wolf
Yup
David Amos
Reply to Larry McCarthy
Methinks your knickers are in quite a knot today N'esy Pas?
Reply to David Amos
Pourquoi penseriez-vous que?
David Amos
Reply to Larry McCarthy
I can read
Reply to David Amos
Moi aussi!
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Surprise Surprise Surprise
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Deficit grows to $92M, minister blames previous Tory government
Revenues were higher than expected, but spending was even higher, putting New Brunswick into solid deficit territory
The provincial government’s projected deficit has grown to $92 million, and the new finance minister is blaming the previous Progressive Conservative regime, arguing he only has four months left in the fiscal year to turn things around and balance the budget.
René Legacy released his province’s second-quarter results on Friday, and the picture is gloomier than at budget time last spring, when the Tories predicted a rosy $41-million surplus.
It is also a significant erosion since the first quarter update, representing the first three months of the fiscal year from April to June. Former Tory finance minister Ernie Steeves reported during the first-quarter fiscal update that the deficit was estimated at $28 million.
“We’re still committed to trying to shrink down that deficit,” Legacy told reporters at a media conference in Fredericton. “The previous government had a plan. They put it in earlier this year with their budget. The plan was to have a $41-million surplus.
“I’m asking my staff if there’s any course correction we can take to maybe bring that down. But obviously this is the starting point that we have.”
Glen Savoie, leader of the Tory Opposition, said the numbers in the update did not come as a surprise.
“Despite a budget of nearly $3.8 billion, the cost of health care for New Brunswickers has driven this deficit,” he said in an email. “The Opposition will be watching to see what new charges the Liberal government applies to the fourth quarter numbers, given they have a one-billion-dollar math mistake in their latest Liberal platform,” he said, without elaborating.
The charge about a $1-billion accounting mistake was made repeatedly by the Tories during the election campaign, but the Liberals stood by the numbers in their platform, steadfastly denying they had made an error.
Pressed by reporters on Friday, the new Liberal finance minister, only 12 days into his job, didn’t have any ideas where he’d find savings. He said he only received the latest figures last week and wanted to get them out before the public, to be as transparent as possible.
The problem appears to be related to spending, not the amount of money coming into government coffers.
Total revenue is projected to be $119 million higher than budget, due in part to an increase in conditional grants from Ottawa and gains in both personal and corporate income tax.
But total expenses are projected to be over budget by $252 million. The most significant difference is in the Department of Health, which is over budget by $193 million due to higher operating and labour costs in the regional health authorities. A significant portion of this, the government says, is caused by overtime and travel nurse costs.
The travel nurse contracts, a $98-million expense in 2024-25 alone, created a flood of controversy earlier this year when they made the national news. Even former premier Blaine Higgs was critical of them, blaming the Vitalité Health Network for signing bad deals with private firms.
Legacy said he was straight jacketed by those contracts but is also hemmed in by the higher expenses because his Liberal government has promised not to penny pinch on health care, where there is significant demand from the public for better services in crowded ERs and clinics.
The $92-million estimated deficit represents less than one per cent of the province’s $13.5 billion budget. That’s why the finance minister said he’d asked all departments other than health to be cautious in their spending.
The Liberals had promised to balance budgets, just like Higgs did in every one of his six years in power – the longest string of balanced budgets in the country – but Legacy believes the previous government is mostly responsible for the red ink that could be spilled by the spring.
“There is opportunity for us to reach out to the departments to try to curtail some of the proposed spending, but because we’re in the eighth month of the fiscal year, we’re starting to be limited on what we can do on that.”
Megan Mitton, deputy leader of the Green Party, said the focus on deficits and surpluses was misguided.
She told reporters Friday the politicians should be more concerned about offering decent public services.
“We have some major crises and one of the top ones is definitely health care,” she said. “That may require a deficit budget this year in order to invest in things like retention bonuses for nurses and preventative health care.”
She said it made more fiscal sense to pay homegrown nurses properly rather than sign expensive contracts for travel nurses, whose companies often charge double or triple normal costs.
“If people don’t have access to primary health care, can’t be seen in the ER, don’t have housing, don’t know where their next meal is coming from, top of mind isn’t, ‘oh does the government have a deficit this year?’ Top of mind is what’s going to happen to help me? Because there are people in crisis right now.”
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