N.B. budget deficit soars to record $1.3 billion

The New Brunswick government’s budget deficit is projected to reach an unprecedented $1.3 billion this year, more than double what the Holt Liberals originally projected. 

Finance Minister René Legacy said it will now be “extremely difficult” for the government to balance the budget by the end of its four-year mandate in 2028.

A balanced budget was a Liberal election promise in 2024, but both spending and revenue projections have made that impossible.

Revenues from corporate and personal income tax and from sales tax are now expected to be $320 million below what was forecast, mainly because of adjustments to how the federal government remits money to the provinces.

Meanwhile, health-care costs alone will be $432.5 million higher than what Legacy projected when he tabled his first budget last March.

More than 40 per cent of that — $176 million — is from increased compensation for New Brunswick doctors under a new agreement with the New Brunswick Medical Society, including extra incentives for them to work in the collaborative care clinic system the Liberals are expanding.

Legacy defended the government decisions that led to the deficit, including that agreement.

“We’re going to see the benefits of it, but later on.”

He cited two other decisions — the elimination of the provincial sales tax on electricity bills and bonuses for nurses that he said has stabilized their workforce — as examples of moves that he said were expensive but necessary. 

He warned, however, that his next budget in March will contain some tough decisions, including the possible closure of schools that are below one-third capacity. 

That idea is contained in a government pre-budget consultation document, and Legacy said so far to it “has been quite interesting.” 

Some schools are overcrowded while others are more than half-empty, he said.

“Is the question whether the education system is properly funded, or is it whether the money we’re putting into education is going to the right places?”

Legacy also would not commit to having money in the budget to help achieve the goal of average child-care costs of $10 a day under a federal-provincial funding agreement.