N.B. government projecting nearly $400M deficit

The New Brunswick government is now projecting a $398 million deficit for the 2024-2025 fiscal year.

The projected New Brunswick deficit for the 2024-2025 has spiked by more than $300 million, representing a stark turnaround from the initially projected $40 million surplus from the previous Progressive Conservative government.

The Liberal government projected the deficit to be $398.9 million in its third-quarter fiscal update released Wednesday. In its last fiscal update, it said the projected deficit would be $92.1 million.

The net debt is expected to be $12.5 billion.

“Several factors negatively influenced the most recent quarter, resulting in both lower revenue and higher expenses than anticipated,” said Finance and Treasury Board Minister René Legacy in a news release.

Prior to the fall 2024 election, the Progressive Conservatives, who originally expected a $40.9 million surplus, projected a $27.6 million deficit. At the time they cited higher-than-predicted health-care costs as the culprit, particularly travel nurse contracts, overtime and training of new staff.

In this latest fiscal update, the government says total revenue is projected to be $30.3 million lower than budget, which is largely attributed to HST revenue being down $136.3 million.

The federal government implemented a temporary GST/HST holiday on certain items from Dec. 14, 2024, to Feb. 15.

In a previous interview with CTV News Atlantic, Premier Susan Holt said New Brunswick would seek financial compensation from Ottawa for the tax holiday.

“We know there are difficult decisions ahead, considering the results we have seen over the last two quarters,” said Legacy. “We remain committed to being fiscally responsible and are determined to help New Brunswickers navigate the very real struggle they face during these challenging financial times.”

The government says total expenses are projected to be $409.4 million over budget due to:

-increased demands on income security

-child welfare and youth services; Social Development on the whole is projected to be $106.4 million over budget.

-higher operating and personnel costs in the regional health authorities (particularly travel nurse costs); health costs in general is expected to be $218.2 million over budget

-nurse retention payments

-the electricity rebate

One of Premier Susan Holt’s campaign promises was a $10,000 payment to 9,950 nurses across the province.

The government also implemented a 10 per cent rebate for eligible residential electricity customers last month.

The fiscal update says general government costs are expected to be $84.6 million over budget mainly due to those two expenses.

The province’s real GDP is projected to grow 1.5 per cent in 2024, which is slightly above the average 1.3 per cent projection from the private sector.

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