N.S. budget update shows increased revenues, but challenges on the horizon

Nova Scotia’s PC government is experiencing a boost in revenue due to favorable financial conditions, resulting in a shrinking deficit and increased over-budget spending. However, the province may soon face challenges as population growth slows and the threat of a trade war with the United States looms on the horizon.

Finance Minister John Lohr recently released the December fiscal update, revealing a forecasted deficit of $247.5 million for 2024-25, an improvement from earlier projections of $467.4 million. Revenue has increased by $642 million, with a significant portion coming from provincial taxes.

Despite the positive financial outlook, concerns about population growth are emerging. While growth continues, it is starting to slow down. This trend, coupled with the federal government’s reduction in immigration numbers and interprovincial migration to Nova Scotia, could have implications for the province’s economy.

Lohr acknowledged the challenges posed by population trends and emphasized the government’s commitment to addressing the province’s needs. He indicated that over-budget spending would continue to address new areas and invest in key priorities.

The PC government has exceeded its budget in several departments, including health, seniors, long-term care, and education. Additional spending outside the budget has been allocated for the Nova Scotia Film Fund, community grants, and various initiatives.

The federal government’s two-month GST holiday is expected to cost the province approximately $82 million, prompting discussions with federal officials about potential compensation for the lost tax revenue.

Opposition leaders have expressed concerns about the government’s spending practices and lack of transparency in budgeting. NDP Leader Claudia Chender criticized the Tories for consistently projecting deficits at budget time and then increasing revenues in subsequent updates, leading to significant over-budget spending.

Liberal House leader Iain Rankin raised concerns about the sustainability of the government’s spending approach and called for a plan to safeguard the Nova Scotia economy against potential U.S. tariffs. He emphasized the importance of proactive measures to mitigate the impact of tariffs on the province’s exports.

As Nova Scotia navigates shifting financial winds and potential economic challenges, government officials and opposition leaders are working to address fiscal priorities and ensure the province’s long-term economic stability.