N.S. government tables deficit budget with more talk about resource development

Nova Scotia's finance minister tabled a budget Tuesday that makes good on campaign promises but comes amid economic uncertainty that could change the province's financial landscape.

John Lohr's first budget as finance minister — and his party's first since winning last November's election — projects revenues of $16.5 billion, expenses of $17.6 billion and a deficit of $698 million. That deficit could grow if the government needs to tap into a $200-million contingency fund it's set aside in the event of tariffs from the United States government.

Lohr told reporters he does not know yet how that funding will be used and decisions will follow any actions by the U.S.

"There's still a great deal of uncertainty around the tariffs and we hope that it will not have to be used," he told reporters.

The budget includes the various tax cuts the PCs promised during the election, many of which will become effective on April 1. They include:

• Reducing the HST by one percentage point ($293 million).

• Increasing the small business threshold from $500,000 to $700,000 and reducing the small business tax rate from 2.5 per cent to 1.5 per cent ($47 million).

• Removing the tolls from the Halifax harbour bridges.

Finance Department officials say the removal of tolls will create $39 million in savings for drivers.

The conversion of the Halifax-Dartmouth Bridge Commission to a provincial Crown corporation will cost the province $15 million for an operating grant to the new corporation, $86 million for capital repairs to make up for the loss of tolls, and there will be a one-time addition of $300 million to the provincial debt to account for taking over responsibility for the bridges.

Despite the uncertainty, Lohr said it was important for the government to keep the promises on tax relief, which also include indexing income tax brackets to the rate of inflation. He said those savings, along with a capital plan that tops $2 billion, can act as a stimulus for the economy.

"The reality is we know that Nova Scotia is one of the highest-taxed jurisdictions in Canada. We know that that is holding back our people."

Campaign promises included in budget 

Other campaign promises included in the budget include paying for the shingles vaccine for people 65 and older ($26.9 million) and making parking at health-care sites free ($19 million). The government will also pay for a new RSV immunization program for children ages two or younger and people 75 or older ($6.9 million). 

The government is spending $61.2 million in 2025-26 to expand the school lunch program to all junior high and middle schools in the province in time for the next school year.

There are 400 new rent supplements at a cost of $3.3 million and the province is extending its share of the HST tax relief to match the federal government for new purpose-built rental housing at a cost of about $54 million.

The government is putting $500,000 toward the advancement of its critical minerals strategy as it puts on a full-court press to increase resource exploration and extraction in the province.

Lohr's budget speech continued a familiar trend started last month by Premier Tim Houston, as he referenced unnamed special interest groups 10 times that he says have prevented the province from harnessing natural resource potential in the past.

Asked to provide examples, Lohr generally mentioned people from the past who advocated for bans on practices such as uranium mining and fracking.

"Maybe in doing this we're addressing the opposition that's been there in the past. Maybe that opposition won't be there in the future. We hope that we can go forward in a collaborative way."

Lohr told reporters his government only started to seriously look at emphasizing natural resource development after the election of U.S. President Donald Trump and the threat of tariffs. The PCs did not discuss the issue during the election campaign.

Trump tariff factor

"The tariffs have caused us to look at everything we're doing and what can we do for ourselves."

NDP Leader Claudia Chender said it's concerning if the government only started to increase its thinking about economic development a few months ago.

"I think that the connection between resource development and the response to the tariffs is tenuous at best," she told reporters.

"We need economic development. The idea that long-term resource plays are going to address the immediate threat next month of Trump's tariffs is specious."

Chender said there is intense economic uncertainty and the budget lacks a clear plan or approach for how it will confront that uncertainty.

The net debt is expected to increase by $2.7 billion this year, climbing to $22.4 billion. Part of that increase is the $300 million from converting the bridge commission to a Crown corporation.

Debt to grow

The government is projecting the debt to grow by more than $9 billion in the next four years, the majority of which the province is attributing to capital construction. Within that figure is the estimated cost for the redevelopment of the Halifax Infirmary.

The government has not released that cost yet, although Health Minister Michelle Thompson is expected to speak to it on Wednesday. To date, the province has spent almost $300 million on the project.

The government is projecting deficits in each of the next four years, although it's difficult to put much weight on that given that they've closed the books with a surplus in each of the previous years they predicted they would be in deficit.

Interim Liberal Leader Derek Mombourquette said he's concerned about what's happening with the debt.

The government is phasing out almost 160 full-time equivalent positions through attrition and not filling vacancies.

It is increasing the non-resident deed transfer tax from five per cent to 10 per cent and expects to raise almost $14 million from the move. The change kicks in on April 1 for non-resident property owners of three or fewer dwellings, including land.