N.S. budget mostly on track, but uncertainty looms

Nova Scotia’s budget is mostly on track at this point in the year, but major challenges loom and Treasury Secretary Allan MacMaster warns that restraint could be part of the equation.

“Are we considering any restraint measures? All the time,” MacMaster told reporters in Halifax during the first budget update for the 2022-23 budget.

Thursday’s figures show that the deficit has increased by $48 million since the budget was presented and approved last spring, and now stands at $554.2 million. Total revenue is estimated at $12.7 billion, up $71.8 million from budget day. Expenditure increased $110.8 million primarily due to higher departmental spend of $97.1 million.

MacMaster said the lack of surprises in Thursday’s update reflected a normalization in provincial finances as the COVID-19 pandemic wreaked less havoc on the numbers.

“We have to pay more”

That’s not to say the numbers are without pressure beyond government control. Inflation and Russia’s invasion of Ukraine continue to cause problems in the supply chain and drive up costs. This, combined with labor shortages, has resulted in delays in some projects and higher prices for others.

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“We know we have to pay more if we want to complete projects, but I know that in healthcare, fixing the healthcare system is a major focus for our government,” MacMaster said.

The minister said his government’s main investments will be in healthcare, education and roads.

Much of the department’s increased spending was related to COVID-19 response, including the province’s testing strategy and rapid testing.

The Department of Elderly and Long-Term Care spent another $31 million, mostly on traveling nurses who came to the province to augment human resources and programs to help people stay in their homes.

There was also a $16.4 million increase from the Department of Communities, Culture, Tourism and Heritage to increase the provincial incentive fund for film and television production in Nova Scotia.

Fiona’s costs not yet known

Thursday’s numbers do not include clean-up cost figures for Post-Tropical Storm Fiona. MacMaster said it’s too early to have a precise feel for costs and better information should be available for the next fiscal update in December.

Fiona isn’t the only big question mark for MacMaster and Treasury officials alike.

The province’s two most important infrastructure projects — the rehabilitation of the Halifax Infirmary and the Cape Breton Regional Hospital — are likely to be the main drivers of rising costs.

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Work on the Cape Breton Regional is ongoing while the final financial submission from the lone consortium bidding on the Halifax Infirmary project is due next month. It is estimated that work at the infirmary could exceed $3 billion.

MacMaster said his government was committed to getting those projects through, although he didn’t say the work would be done at any cost.

“Our intention is to continue these processes,” said MacMaster.

“They are generational investments that need to be made. The health system needs them and Nova Scotians need them.”

Personal income tax down, HST up

Personal income tax is down slightly by $59.3 million while HST receipts are up $45.3 million, suggesting people are still spending during these uncertain times, according to Treasury Department officials .

Nonresident property tax receipts are down $65.5 million from budget following Premier Tim Houston’s decision to end a proposed tax measure that has met with stiff opposition from residents outside the province own seasonal homes or family properties here.

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Liberal leader Zach Churchill said he had concerns about the direction the economy was taking.

“We’re seeing a downturn after eight years of growth and we have to remember that this is people’s businesses, this is people’s income, and this is also the province’s ability to get into healthcare, housing and its others Investing priorities,” he told reporters.

Other notable changes to the budget announced during the budget update include $10.4 million for the Mass Casualty Commission’s public inquiry, $2.1 million to offset pay increases for judges who ruled the previous Liberal government and $8.3 million in overtime expenses for provincial employees who worked on the day of Queen Elizabeth II’s funeral, which the province declared a public holiday.

MacMaster acknowledged that there would be differing opinions on this latter charge.

“I think depending on who you ask there are a lot of Nova Scotians [who] would have felt that after 70 years Her Majesty and her service to the Commonwealth would have been a day which they felt should have been marked with a public holiday.