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 are looming and Finance Minister Allan MacMaster warns restraint could be part of the equation.

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

Thursday's numbers show the deficit has increased by $48 million since the budget was tabled and passed last spring, clocking in now at $554.2 million. Total revenue is projected to be $12.7 billion, up $71.8 million from budget day. Expenses are up by $110.8 million, due mainly to increased department spending of $97.1 million.

MacMaster said the lack of surprises in Thursday's update reflects a normalizing of the provincial finances as the COVID-19 pandemic causes less havoc in the numbers.

'We're going to have to pay more'

That's not to say the numbers are without pressures outside the government's control. Inflation and Russia's invasion of Ukraine continue to cause supply chain issues and drive up costs. That, combined with labour shortages, have resulted in the delay of some projects and increased prices for others.

"We know we're going to have to pay more if we want to complete projects, but I know that in the case of health, it is a significant focus for our government to fix the health-care system," said MacMaster.

The minister said his government's main investments will be in health care, education and roads.

Much of the increased department spending was related to COVID-19 measures, including the provincial testing strategy and rapid tests.

The Seniors and Long-Term Care Department spent an additional $31 million, mostly on travel nurses who came to the province to boost staffing resources, and programming to help people stay in their homes.

There was also an increase of $16.4 million at the Communities, Culture, Tourism and Heritage Department to beef up the province's incentive fund for film and television production in Nova Scotia.

Fiona's costs not yet known

Thursday's numbers do not include figures related to the cleanup costs for post-tropical storm Fiona. MacMaster said it's too soon to have an accurate sense of the cost and better information should be ready for the next fiscal update in December.

Fiona is not the only major question mark for MacMaster and officials in the Finance Department.

The two most significant infrastructure projects in the province — the redevelopment of the Halifax Infirmary and Cape Breton Regional Hospital — are likely to be major drivers of increased costs.

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

MacMaster said his government is committed to seeing those projects through, although he stopped short of saying the work would happen at any cost.

"Our intention is to continue through those processes," said MacMaster.

"They're generational investments that need to be made. The health-care 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 revenue is up $45.3 million, something Finance Department officials said indicates that people are still spending money during these uncertain times.

Non-resident property tax revenue is down $65.5 million from the budget as a result of Premier Tim Houston's decision to kill a planned tax measure that faced stiff opposition from out-of-province residents who own seasonal homes or family properties here.

Liberal Leader Zach Churchill said he has concerns about the direction in which the economy is headed.

"We're looking at a downturn after eight years of growth and we have to remember that that is people's businesses, that's people's income, and that's also the ability of the province to invest in health care, housing and their other priorities," he told reporters.

Other notable changes from the budget announced during the fiscal update include $10.4 million for the Mass Casualty Commission public inquiry, $2.1 million to make good on wage increases for judges the previous Liberal government rejected and $8.3 million in overtime costs for provincial employees who worked on the day of the funeral for Queen Elizabeth II, which the province declared a statutory holiday.

MacMaster acknowledged there would be differing opinions about that latter charge.

"I think, depending on who you asked, there would be 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 that they felt should have been marked with a holiday."

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