HALIFAX – Nova Scotia’s finance minister said Tuesday that the province’s deficit will grow by $38 million, due largely to the deferred accounting of federal funding for a new convention centre and a drop in corporate profits.
Maureen MacDonald delivered the first fiscal update for 2012-2013 since the government released its spring budget, which promised to balance the books by next spring despite a deficit forecast of $211.2 million.
MacDonald said the province was still on course to balance the budget even though it is now forecasting a deficit of $249.3 million —an increase of $38.1 million
“I invite everybody to the legislature in the spring to see the budget and we’ll know when it gets tabled,” she said when asked if she would deliver a balanced financial budget.
“We have a plan. So far, we are on track with that plan.”
MacDonald said the higher deficit was mainly driven by to the deferral of $36.6 million in federal funding for a new convention centre in Halifax. She said that money has been received, but that the contract requires it be accounted for when the centre is nearing completion.
MacDonald, who gave her first fiscal update since becoming finance minister in May, said that is expected to be in 2015.
The forecast was also affected by a $10.9-million drop in projected growth in corporate profits. MacDonald said that was due to delays in the planned startup of the NewPage Port Hawkesbury paper mill in Cape Breton and the closure of the Bowater Mersey paper mill in Liverpool in June.
On Saturday, the province announced a revamped deal by Vancouver’s Pacific West Commercial Corp. to buy the NewPage mill.
Progressive Conservative Leader Jaimie Baillie panned the financial picture, saying the government is taking money from Education and Health to finance the NewPage deal. He pointed to a section of the fiscal update that said a $20 million land purchase for NewPage “is almost entirely offset by reduced capital spending by the Department of Education for school construction and renovations, and by the Department of Health and Wellness for IT projects.”
“This to me in living colour is what’s wrong with the way this government manages our economy,” he said. “They’re going to pay for the NewPage deal by holding back on school construction. That’s exactly why I say that they have their priorities wrong.”
But Dan Harrison, an Education spokesman, dismissed the assertion and said the money hasn’t been taken from his department. Rather, he said his department has not yet spent $3.6 million that was in an earlier budget.
The Health Department did not return requests for comment.
Liberal finance critic Diana Whalen said the government has increased the deficit despite cutting education and health-care funding, and increasing taxes.
“This government cut $65 million from education and charged us more than $360 million in additional taxes each year,” she said in a statement.
Whalen said the province has failed “to create an economy capable of creating jobs,” resulting in lower revenues.
The government said in its budget last April that it would proceed with a 1.3 per cent reduction in overall funding to school boards. But spending for heath care was up 2.5 per cent to $3.9 billion.
At the time, the government said its overall net debt, which stands at $13.3 billion, is projected to hit $13.7 billion as of March 31, 2013.