N.S. budget contains major cuts as province confronts $1.2B deficit

The Nova Scotia government’s latest budget includes more than $300 million in cuts, and even deeper cuts could be coming over the next four years.

This year’s cuts include the equivalent of more than 1,000 full-time jobs spread across government and the broader public sector, such as Crown corporations and the regional centres for education that oversee schools. Officials say the public sector cuts will target management and administration rather than front-line services such as teachers.

The government plans to reduce the civil service by five per cent and the broader public sector by three per cent each year over the next four years as part of its so-called fiscal sustainability plan, an initiative intended to get government expenses in line with revenues.

Finance Department officials said during a technical briefing with reporters Monday that the five per cent job reductions in the civil service can most likely be achieved through attrition and retirements.

The size of the cuts increase each year over the life of the plan, with the following targets:

Finance Department officials said the size of the cuts planned do not account for any new revenue that could come from natural resource development or other projects, such as the increased defence spending promised by the federal government.

Government officials said job cuts for this fiscal year must be achieved by January 2027. The departments expected to take the biggest hit are the Justice (83 full-time equivalent posts) and Social Development (78 full-time equivalent spots).

The government is also cutting discretionary grant spending by $130 million. The impact of the cuts to grants are yet to be known, and with the budget being tabled Monday it’s expected those calls will go out this week. No further details were provided.

This latest budget includes projected revenues of $17.3 billion and expenses of $18.9 billion, and the province is projecting deficits for the next four years. Despite the talk of a need for restraint, department spending is up about 7.7 per cent compared to last year's budget.

The net debt comes in at $27.9 billion with a net-debt-to-GDP ratio of 39.4 per cent.

It reflects the stinging reality that became clear for Premier Tim Houston last fall: the record revenues driven by population growth in Nova Scotia have dried up. The Houston government had benefited from that growth, but it's clear there will be no windfall this year to make up for his government’s penchant for over-budget spending.

Since coming to power in 2021, the Progressive Conservatives have spent about $1 billion or more each year outside their own budgets. For 2025-26, it was about $1.4 billion.

Finance Minister John Lohr told reporters he does not regret that approach, but said out-of-budget spending, or additional appropriations, would be less likely unless revenues increase.

"Since coming into government we have invested, invested, invested in Nova Scotians [and] in the things that Nova Scotians need," he said.