Budget update shows increased deficit, but history shows not to bank on that

Nova Scotia Finance Minister Allan MacMaster continued a trend of his Tory government on Friday when his first provincial budget update for the 2024-25 fiscal year showed an increased deficit.

The public will have to wait until the next update in December to find out if MacMaster maintains another of his government's budget trends: turning large deficits into surpluses via infusions of new cash.

Documents released on Friday show the deficit is now forecasted to be $654 million. That's up from $467.4 million when the budget was tabled in March. The government is pointing to increased expenses at a time when provincial revenues are softening, the latter largely the result of slowing population growth and lower household spending.

MacMaster was cautious when asked if the days of big swings from deficit to surplus are coming to an end.

"Just the fact that the provincial source revenues are down at all, even if it's a small amount, I think that shows something that's likely consistent across the country and that's that the economy is starting to cool," he told reporters.

Major unbudgeted spending continues

The government will monitor and scrutinize spending in the lead-up to the next budget to ensure officials are accounting for whatever is happening with population growth in the province, said MacMaster. He said no specific order has gone out to departments to reduce spending.

As for the current budget, the Tories have also continued their trend of spending major amounts of money outside their fiscal plan.

With each of their first two budgets, the government posted more than $1 billion in unbudgeted spending.

So far this year, additional appropriations, or unbudgeted spending, total $448.5 million. The majority of that comes from the Health Department, which overspent by $178.4 million; Service Nova Scotia, which was over budget by $53.8 million; and capital spending, which went over budget by $76.1 million.

That extra capital spending includes $54 million on the early works program as part of the Halifax Infirmary redevelopment project. Finance Department officials said the work remains in step with its $254-million budget, but because the work is happening faster than anticipated, more bills are coming in sooner.

A spokesperson for Build Nova Scotia said in an email that $149.5 million has been spent so far as part of the early works contract. The province is still without a contract for the actual redevelopment work.

Other major spending increases included an extra $17.8 million for travel nurses, $10.2 million more for the Middle River pumping station as part of a water supply agreement with Michelin, $45 million for the heating assistance rebate program because the budget was formed without updating the current payout to applicants, and $40.6 million for home care due to increased demand.

The out-of-budget spending has drawn repeated criticism from the auditor general, who has pointed out that Nova Scotia's legislature is the only one in the country where elected representatives do not debate such costs. MacMaster has rejected the suggestion, arguing that previous governments have operated the same way and the public and reporters can scrutinize the numbers.

NDP Leader Claudia Chender said she has "very little" confidence in the government's numbers and she continues to take issue with the level of unbudgeted spending by the Tories.

"We hear that there's going to be a $600-million-plus deficit, we hear the minister saying that he's concerned and that Treasury Board is clamping down, but we just signed an unsolicited $43-million bid to Google for search capacity," she told reporters.

"We're pouring money into Hogan Court against the specific advice of the auditor general. There isn't a lot of logical coherence in what we heard today."

Chender said the government has benefited from major boosts in population in recent years and the tax revenue that comes with those new residents. A softening of that could lead to more transparency from the government about how it spends money, she said.

"I think that this government has been quite literally banking on people coming here to allow them to open the chequebook in any way and manner that they see fit, often on a handshake."

Liberal finance critic Keith Irving said nothing from the Tories' financial practices shows that they can control costs. The government is continuing a pattern of under-budgeting and overspending public money, he said.

"In the last fiscal year, every department but one — 17 of 18 — overspent their budget," he told reporters.

"Five months into this budget, 13 of the 18 have overspent. So there's no budget control in this government."