Liberal deficit jumps again, and it may go even higher

The Holt Liberal government is sinking further into red ink this year, projecting an $834.7 million deficit that the finance minister acknowledges could go even higher.

Revised projections for corporate and personal income tax revenue, and higher than projected spending in health care and social programs, led to the new calculation.

In August the projection was $668.7 million, which was itself worse than what Finance Minister René Legacy forecast in his first budget last March.

Legacy blamed the previous government’s spending restraint — which he said starved public services of the money needed to keep up with a growing population — for the impetus to spend now.

“While this is not the fiscal situation we wanted to be in, years of neglect in our services and infrastructure have led us to this point, and we have to address it,” he said.

Asked if he would rule out a $1 billion deficit by the time the year ends, Legacy said a pending announcement on how doctors in the province are paid would have “a serious impact” on the bottom line.

“If nothing else changes on revenues or on some improvement on expenses, there is a potential that it could still grow by fourth quarter,” he said.

Don Monahan, the Progressive Conservative finance critic, said he expects that to happen, given the Liberal reluctance to rein in spending.

“It’s a very sad state for all New Brunswickers, and New Brunswickers should be worried and concerned, because if this is what’s happening now, what can we expect in the future?” he said.

Legacy spoke of “difficult choices” ahead, including before the current fiscal year ends next March 31. 

But asked for specifics, he would not commit to spending cuts and said many of the choices until now have been rejections of even higher spending requests from government departments.

“We often equate ‘difficult choices’ with cuts, or with something disappearing,” he said.

“To be truthful, sometimes we can’t acquiesce to their demands, and that’s a difficult situation … but you’ll never see that decision because we’re just not investing.”

Saying yes to those kinds of requests ahead of the March budget could have produced a deficit of $1.6 billion to $1.7 billion, he said.