Nathalie Sturgeon, Local Journalism Initiative Reporter, Saint Croix Courier

Finance Minister Rene Legacy said the province’s deficit has grown to $1.3 billion amid higher spending in health care and social development. 

Total revenue is projected to be $372.1 million lower than budgeted, largely driven by lower corporate income tax and personal income tax revenue, as well as lower Harmonized Sales Tax (HST) revenue. It is the largest deficit New Brunswick has ever faced, according to the Department of Finance and Treasury Board. 

Expenses are also expected to be over budget by $407.3 million, with net debt projected to be $13.9 billion. Personal and corporate income tax is down $107 million and $139.2 million, respectively. 

HST revenue is down $74 million, according to the Department of Finance and Treasury Board (FTB), due to a negative adjustment for the 2024 taxation year. 

The Department of Health is projected to be over budget by $432.5 million, mainly due to operating costs with the Regional Health Authorities (RHAs), Medicare services, and out-of-province health-care costs. 

Assistant Deputy Minister Nick McCann said the out-of-province health-care costs are largely tied to demand for services in Nova Scotia, Ontario, and Quebec. 

Social Development is projected to be over budget by $127.1 million. Staff said this is due to increased demands for service within income security, child welfare and youth services, and seniors and long-term care. 

The Department of Natural Resources is also projected to be over budget by $14.5 million due to fire suppression and mobilization associated with wildfires this summer. 

The Special Operating Agency continues to impact both the revenue and expense side of the provincial budget due to the lack of progress on projects under the Integrated Bilateral Agreement with the federal government.

On the revenue side, the SOA is down $11.9 million, while on the expense side, it is under budget by $61 million. 

The Liberal government has been warning about difficult decisions that will need to be made amid the growing deficit, turning to the public for feedback on where cuts could be made.

During the election, Premier Susan Holt promised a balanced budget during the four-year mandate, something Legacy now says will be “extremely difficult.” 

“We need to start bringing down that deficit to a point where it’s manageable,” he said, speaking with reporters Tuesday. 

He said the government needed to improve health care and education services. 

“What we wanted was the surpluses to be invested in the systems, and that’s what we’re doing now. Unfortunately, those surpluses aren’t there anymore,” he said. 

Delayed projects 

Several projects under the Canada-New Brunswick Integrated Bilateral Agreement have not advanced, impacting the province’s bottom line. 

One of those projects is the Saint Andrews Market Wharf and Square refurbishment project, according to McCann. 

McCann could not say what other projects were delayed or had advanced since the second quarter update in November 2024. 

Previously, he identified the Rothesay wastewater project, the Mount Allison University library rehabilitation, and the UNB law building as projects that have been delayed under the Integrated Bilateral Agreement, which is a joint funding agreement between the provincial and federal governments. 

The wharf project is being funded through the federal department of Housing, Infrastructure and Communities Canada (HICC). It is then distributed to the provinces and territories through bilateral agreements. In New Brunswick, the Regional Development Corporation (RDC) oversees the funding.

The project has a federal deadline of October 2033 and a provincial deadline of March 2027. Documents obtained through a Right to Information Request by The Courier show there is no flexibility in the amount of money allotted to the municipality. 

Emails from RDC in November 2024 state the funding had already been allocated and the municipality would have to find a way to cover the additional costs. 

Legacy told The Courier once the project is approved, the federal portion is locked in. 

“If the scope goes up, or if the costs increase with inflation, as we move along, then that federal portion stays the same and obviously, as you can see today, the province doesn’t have the means to cover any increase that the federal portion can’t cover,” he said. 

He said the provincial government is not in a position to increase the budget for those projects to cover federal shortfalls. 

A structural engineering report is expected to come to the council in the coming weeks and will be made public following council’s feedback, according to staff with the town at a recent meeting. 

Opposition response

Progressive Conservative MLA Don Monahan, the finance critic, said there are concerns that with another fiscal quarter to go, the deficit will only continue to grow. 

“It’s a sad day for New Brunswickers and especially the younger generation, because who is going to pay for all these tax deferrals,” he said in an interview with The Courier. 

Monahan said he doesn’t believe the lives of New Brunswickers are being improved in proportion to the level of spending by the Liberal government.

“Things are not better. Healthcare is not better. Education, we reduce the numeracy and literacy scores so kids could feel good about themselves because they weren’t making the mark,” he said. “How is that benefiting New Brunswickers and our future workforce?” 

Monahan believes the Liberal government has already determined where it wants to make cuts, despite public consultations remaining open until Feb. 20. 

The budget is expected to be tabled on March 17, just one month away. 

“It is a feel-good situation to show that they’re consulting with the population, but at the end of the day, it’s not going to have any ROI or results for the general population,” Monahan said. “I just want to call that out and show that it’s kind of like an oxymoron. It’s not going to move the needle whatsoever.” 

Legacy was asked whether he believed he should stay on as minister or if he had made mistakes and whether the government’s mandate had tied his hands, but said that decision isn’t up to him.

“The reality is, if you look at this deficit, it’s hard to point to a single decision,” he said, noting the various things including nursing bonuses and the newly signed physician agreement totalling $176 million for this year. 

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